For The Young, Giving The HOuse "Back To The Bank" Is No Biggie

The housing crash has come to this: With so many Americans
owing more than their homes than they’re worth - in some cases
hundreds of thousands of dollars - more are debating walking
away, or halting payments they can afford and waiting for
foreclosure.

Statistics don’t exist because no one declares their reasons for
walking away, but a handful of papers have suggested that there’s
something to the anecdotal reports about borrowers “strategically”
defaulting on their mortgages.

A top industry consultant suggested today during a meeting with
Developments that such defaults may be more common with the
younger set (under 30) that didn’t grow up with the pay-your-mortgage-before-everything-else mentality. This generation
is more likely to view owning simply as an investment, says John Burns,
president of John Burns Real Estate Consulting. Culturally, “it’s more
acceptable than it was” during previous downturns, he says.

Indeed. A few months ago in Las Vegas, I met a 26-year-old man
who said that in 2007, he put no money down for a $250,000 loan
that got him a 1,400-square-foot, four-bedroom home in Northwest
Las Vegas. When he spotted a nearby home with the same floor
plan-but with a pool and guesthouse - for $100,000, he moved out
in January and gave it “back to the bank.”

“Why would I keep paying on a $250,000 loan?” he asked. “I wo uld
not ever buy a house again.” (We tried to follow up with this guy, but
his number had been disconnected.)

Think about it: If you’re young and unattached, relocating into a
rental isn’t that big of a deal. And it may be another seven years
before you’re ready to buy again–by then the black-mark is off your
credit score. But families have to think about children in local schools,
and community ties are more important. For them, a monthly mortgage
similar to rent might make staying put - and not having to move an entire
household - more logical.