According to behavioral psychologist Rom Brafman, who co-wrote "Sway: The Irresistible Pull of Irrational Behavior," potential homebuyers want to get the best deal so they want to avoid the situation where they are buying while prices of lender and tax foreclosure properties are going down and not when they are at their lowest point.
Housing analysts and economists have been analyzing consumer behavior during these difficult times in order to help the government develop a response and help rejuvenate the economy. They found that there are psychological barriers that consumers must overcome before they buy a home from among the low-priced lender and tax foreclosure properties.
One psychological barrier is the thought that the price will still go down and therefore the right thing to do is wait for a few more months. Another barrier is job uncertainty. With the high number of companies cutting jobs or closing operations, even professionals in stable enterprises are feeling the uncertainty of employment and the adverse effects of lender and tax foreclosure properties. Where would they get the money to pay the house if they are laid off just like the others that they have seen or read about?
The third barrier is the investment environment. Prospective investors doubt if they can make money in a housing market overloaded with lender and tax foreclosure properties and shunned by prospective homebuyers waiting for prices to go down further.
The fourth is the individual's tendency to analyze what really is important to oneself during difficult times. Many persons, according to Nicolas Retsinas, head of the Harvard University's Joint Center for Housing Studies, put more time and effort in analyzing whether a particular home is really what they want or whether it is located in a place that they really like to live in. Retsinas explained the tendency as an effort to redefine the home.
Housing experts say the point where the prospective homebuyers actually buy is the point that they realize they need a home for themselves and their families and they need to buy now. They affirm themselves that what they are buying is not for investment but for their own need and comfort. At this point, they buy a home whether lender and tax foreclosure properties are at their lowest price levels or not.
Fox News has reported that over 2.3 million Americans stand to lose their homes due to foreclosures in 2008, from the 52 million total home mortgages last year. This is 81 percent higher than the rates from the previous year. Plans were put forward for the government to force banks to stop processing on all tax foreclosure properties for a period of at least 4 months. This solicited various responses from different sectors as indicated by the national telephone survey conducted by Rasmussen Reports.
According to the survey, 56 percent of Americans are in favor of the 6-month tax foreclosure properties moratorium. 30 percent are opposed to the plan while the rest are still undecided whether they are in favor of this plan or not. A similar survey with Democrats showed 71 percent support this plan, while only 42 percent of Republicans are in favor.
For people who are unaffiliated, 51 percent are in agreement with the plan. On the business side, 65 percent of non-investors are agreeable with this plan, however, only 49 percent of investors liked the idea. This government-imposed moratorium on tax foreclosure properties will receive support from the House Financial Services Committee, as clearly indicated by Rep. Barney Frank.
This new plan is not a new concept as talks and calls for moratorium have reverberated since last year. California has made its own move and imposed a 90-day moratorium, while Ohio is contemplating its own 6-month version. Prominent banks like Citigroup, Wells Fargo and Bank of America have taken voluntary steps on halting foreclosures, while several local officials across the country have also temporarily placed tax foreclosure properties on hold.
This information from the survey came shortly after President Obama made an announcement on the government's plan to help up to nine million homeowners at risk of losing their homes to foreclosures, through a $275-billion federal government program.
The plan has received negative feedback from most Americans, particularly the part where the government is planning to subsidize mortgage payments for these beleaguered homes. Most still think that helping these people in trouble because they bought houses that are more than what they could really afford is a bad idea. 45 percent of survey respondents oppose this federal plan.
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