U.S. Housing Market

It was suggested to me today that possibly, part of the housing market problem is that people are finding that housing is less expensive in certain parts of the U.S.A., and as such they are intentionally stop paying their mortgages so that the bank assumes responsibility of the house which leaves people unattached to buy a less expensive house. The underlying thought being that if they tried to sell the house in the market, instead of letting the bank foreclose, that they would lose money in the investment.

I cannot say that I agree with this assessment. The reason for this is that doing this sort of practice (I mean forcing the bank to foreclose due to not paying the mortgage) would, I imagine, drastically lower the person’s credit thus making them in the eyes of other banks an unwise investment. At saying this, it is not unreasonable to think that as houses in a specific area of the country become lower that housing markets in other parts of the country would have to lower theirs to compete. In return, from the banks perceptive, causing the problem to become worse as the value of the house would decrease from before they took on the responsibility and/or in terms of markets statistics five or more years ago, for example.