The new reality is that if people do walk away from their homes, given the very challenging climate to get a new home loan – they may be better off staying put, making those house payments, and waiting (perhaps years) for the real estate market to return.
More people may be realizing this, according to CNN Money,
“There are two effects that suggest [walk aways] won’t happen so easily,” he says. “The first is the endowment effect. People tend to value their own house above its market price. Owners don’t want to sell at a loss. They have what we call a loss aversion.”
The second is that people weigh the importance of immediate outcomes more heavily than long-term effects. Walking away involves upfront expenditures of time, money and effort, while the benefits of walking away are back-loaded.
It is refreshing to see that people are recognizing the devastating reality of walking away from a home loan. As long as people have the ability to make the payments, they should
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