Largest Expense is Still Housing

Not only is it the largest expense, but in prior consumer surveys the consumer feels they have the least 'control' over their housing related expenses.

Energy costs, property taxes, home owners insurance, mortgage interest, all tend to create a feeling that housing expenses are totally outside their control... which is an accurate statement for most house owners. Their options are to sell the house and rent, or to consider more closely monitoring their housing related expenses, controlling the things they can control, letting the rest go. That's a form of liability management, just helping people consider what they can, and clarifying for them what they can't.

 

One interesting consideration of the Consumer Expenditure Survey study is the expenses are considered interest only for all expenses, so principal does not show up as an expense to the consumer, yet they do feel it in their overall cash flow. As you can see from the chart, the level of pain is relatively higher for the lower income earners, but still makes up over 30% for the high income earner. This trend is actually pushing Home ownership rates in the US down, and putting more pressure on Rents, as the median rent in the US jumped 6% in 2006 after stay relatively flat for many years. If that increases, selling and renting becomes less attractive as well.

When you consider the emotional impact of the lost Equity, you can see why consumers want more guidance if their real wealth declines, even if it is simply letting them know that things will be ok. The forthcoming mortgage resets will continue to put upward pressure on housing related expenses and further challenge savings ability of the typical consumer.

If you are looking for a financial strategy and cutting-edge service, the most completive interest rates, and a long-term financial advice to assist you and your family in enhancing your overall financial objectives, then Roger Perris is the right Real Estate Asset Manager for you. The more we understand the intricacies of your Dreams and Goals, the more assistance and service we can provide.

We look at all the variables involved in your financial situation, use the latest technology, do the research, set goals and timelines, and keep in close touch with our Clients from start to finish.We will assist you in accomplishing your goals, not focus on ours. We can help you far beyond the scope of just obtaining a mortgage, and we look forward to an opportunity to do so.