The Mental Impact of Housing

The findings of Black Knight’s Mortgage Monitor report released on Monday indicate declining active foreclosures. The report also states, that at the current rate of reduction, (a six-month average annual decline of 27 percent) active foreclosure inventory would hit a record low in September 2019, with fewer than 200,000 cases nationwide.

But looking back a decade ago, foreclosures were alarmingly high. And although the market has changed, the lessons learned from that period still have a lasting impact.

Daryl Fairweather, Chief Economist at Redfin, spent a substantial amount of time in 2009 speaking to more than 100 homeowners facing foreclosures, the ramifications of foreclosures can leave an indelible mark on several households. She shared her takeaways from these conversations, in an article posted on Redfin's site titled "What I learned from 100 homeowners facing foreclosure in 2009." 

In order to better understand the underlying causes of the housing bubble that led to the subsequent crash, Fairweather explored the financial situation, employment history, financial literacy, and medical expense history of homeowners. What stands out in her assessment about their situation is a certain level of desperation and a call to help, which eventually led her to study more about how the economy is shaped through individual experiences and the financial consequences of their choices, she wrote in a recent blog on Redfin.

Several homeowners, according to Fairweather, were ill-informed and lacked adequate experience about the housing market. The inability to detach themselves emotionally from their homes also played on how they valued their homes, often times above the market price.

To ensure that individuals are economically and emotionally sound, there is a dire need to help consumers make informed decisions about their housing choices, which in turn affects their mental health. Providing easy access to as much as information possible to educate consumers about what goes on in their local market is also imperative to make a real difference.

Keep an eye out for Fairweather's interview in the Ask the Economist section of DS News' December issue.

Fairweather pointed to the importance of education on the housing market to equip buyers and sellers to appropriate the right value, financial literacy as well as a deeper understanding of their local markets. Emotions play a big role in how buyers and sellers base their decisions. More avenues that educate, inform and inspire homeowners to pursue their dream of owning a home without facing foreclosures and eviction will help shape the economy in a more positive way, she wrote.