It doesn't take a financial catastrophe in the housing market to put consumers in danger. Epic meltdown or loss of work, hardship is hardship, and people often have to make tough decisions about how much they can afford and how much they can save on housing.
The prospect of default is scary. Actually defaulting on obligations is horrifying for most.
Jed Kolko, Trulia [1]’s chief economist, Wednesday released the firm’s findings on how people would likely cope with having to spend less on their housing. More than anything, people downsize. According to the results of a survey [2] Trulia conducted in March and April, 38 percent of respondents ‒‒ by far the largest single percentage of any option ‒‒ said they would move to a smaller house or apartment if they were forced to cut back on housing costs.
Of all the options, which include taking on roommates or moving in with others ‒‒ refinancing was not one of Trulia’s options ‒‒ respondents showed a heavy preference (about 60 percent) for staying as autonomous as possible. Homeowners in particular are significantly less willing to get a roommate than renters. According to the survey, 25 present of renters would opt to take on a roommate, compared to 16 percent of homeowners. Renters also were more likely to take more drastic measures, such as live in their cars or move back in with their parents, though none of these kinds of options got a lot of support from either group.
Still, 19 percent of respondents overall said they would take on a roommate rather than downsize, the same percentage of people who would opt to move to a less expensive area in order to keep the same general living space. Notably, middle-aged people are the most reluctant to go anywhere. Millennials (aged 18-34), said Kolko, are more willing than older age groups to move into someone else’s home or rent out part of their own home. “Young adults are, of course, more likely to have the option of moving in with their parents than older adults do, but they’re also far more likely than older adults to move in with a non-relative or rent to a roommate,” he said.
People age 55-plus, too, are more likely than the 35-to-54 set to move, whether to a smaller house, more affordable area, or into a relative’s or friend’s house, the study found. The middle-agers are also be twice as likely to stop paying the rent or mortgage in order to avoid moving as other age groups would be, though few people in any age group would take that step, Kolko said.
Status also has a lot to do with the decision-making, Trulia found. “Your strategy for cutting housing costs depends not only on who you are, but also on where you live,” Kolko said. “Respondents living in more expensive neighborhoods would be more likely to move to a cheaper neighborhood or city if a major financial hardship struck. After all, if you’re already in an expensive neighborhood, there are other neighborhoods that are cheaper by comparison.”