Skip to main content

Stop Making Mortgage Payments and Buy a Car?

On Sunday the Review Journal published an article about taxable sales being up in Clark County, even with the high unemployment rates and lower than normal spending by tourists.  So, what explains this increase in spending on consumer goods?  Some analysts speculate it is due to people not paying their mortgages and having a lot of extra cash to spend.  The article quotes the August report of the Mortgage Bankers Association findings that 74,526 households in Nevada are not making their mortgage payments.  The numbers do not indicate how many mortgages are going into default due to hardships such as loss of income or increased expenses due to health problems.  It would be very difficult to quantify the number of people doing a strategic default.  (Someone who stops making mortgage payments even though they are financially able to do so but is underwater on their mortgage is making a strategic default.)

When an economy is weak, people do curtail spending.  After a certain amount of time, though, spending will increase as people become less nervous about the economy or must make purchases previously postponed.  This also may account for the increase in spending.

In fact, the increase is probably due to all of these factors.  To read the entire article, follow this link.

Leave a Reply

Your email address will not be published. Required fields are marked *