Many homeowners have taken advantage of long-term loans to purchase their dream home. But in the aftermath of the mortgage and real estate meltdown, some pundits suggest that, eventually, the classic 30-year fixed mortgage could be in jeopardy. For an explanation as to why, see this recent story from the New York Times (click to link).
Long-term mortgages aside, there are other issues that could impact home ownership in the coming years—especially for first-time homebuyers—such as new fees, qualification criteria, and more. To look deeper into those issues, see this story from yesterday’s “Smart Money” section of the Wall Street Journal (click to link).
Implications: I’ll remind the reader that I do not consider myself a futurist or forecaster. But enough things are lining-up here that it might be smart to consider the consequences of a market where home ownership is less widespread—or at least less affordable—than it is now. In a cash-pinched economy, the government is looking for cost savings just like everyone else… and housing subsidies could be an attractive target for the budget ax.
If you sell home furnishings, appliances, home improvement, home entertainment… how will your world evolve, if these changes come to pass? These possibilities might be hard to think about right now. But they’ll be much more difficult to deal with if they start to happen when you’re not paying attention.
If there are more renters, will they all choose apartment/townhome living? Will home furnishings necessarily get smaller? Or will a cottage industry of traditional-home rentals emerge… putting people into the same types of homes, but now as renters rather than owners? What will the tax implications be for homeowners that pay no mortgage interest?
However the market changes, there will be companies ready to profit. Here’s hoping you are among them!
Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.
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