Tuesday, March 4, 2008

Economic behavior and homeownership

NYT article on homeowners has a good quote on the impact of negative equity on homeowner behavior. “When homeowners do not have skin in the game, they act like they do not have skin in the game.”

We should not be surprised that behavior will change when economic incentives and costs change. If there is declining or negative equity, there is less likelihood that homeowners will do whatever it takes to avoid delinquency or foreclosure.

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