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Housing Bubble Hits the Ozarks...But Not Very Hard

Credit: Jeff Turner/Flickr

I'm Mike Smith, and our Sense of Community subject today is area homeowner debt. 

David Mitchell is an associate proffessor of economics and director of MSU's Bureau of Economic Research: "Homeowner debt in Missouri and the Ozarks, is doing ok, compared the rest of the country.  When you look at loans as a percentage of assets for banks that are pass due between 30 and 89, and over 90 days, Missouri is doing quite well.  Especially in the Ozarks as we didn't get caught up in the bubble as they did in Nevada, California or Florida.  That's not to say we've escaped unharmed."  Mitchell says his calculations, using 1980's dollars, show  prices for the average home in Missouri are at plus and minus 1%.  Esentially holding steady.  " So this could be problematic when people go out and borrow a whole bunch of money to put into a home.  In essence borrowing money at 4-5% now, typically in a normal interest rate market 6, 7 or 8% if you’ve got good credit.  You’ve got a lot of depreciation, maintenance and repairs on homes, and of course you’ve got inflation at 2-3% every year so when you include all that, you find out that statistically speaking, you are not going to get a large return on real estate."

Daren Blomquist is Vice President of RealtyTrac , based in Irvine Ca.  “Even though the returns are not crazy good, by the discipline of paying off that mortgage every month, eventually in 30 years you will own that home outright.  Many home buyers are realizing a home is not primarily an investment, it’s a place to live.  Certainly it makes more sense than renting because at least you’re getting in most cases, some appreciation on that even though that appreciation is not keeping up with inflation.  But for the average American who doesn’t have time for sophisticated investing, it’s a good way to slowly but surely build wealth over the course of 30 years.” Daren Blomquist says another indicator on the health of homeowner debt is the foreclosure rate:  "RealtyTrac ranks metro areas nationwide, anything with a population of 200,000 or more.  The foreclouser rate for the SGF Metro area of Greene, Christian, Dallas, Polk and Webster Counties  is 5 times less than the national average.

When our Sense of Community Series continues at 4:30 this afternoon, getting a home loan.  We get a sense of how easy it was before the Housing Bubble, and how hard it is now.

For KSMU, I'm Mike Smith.