Friday, May 7, 2010

High Income Affluent Adults Have Highest Rate of Foreclosures

  • I found this study really interesting. The highest percentage of foreclosures was actually among high income earners who were greedy, and aggressive with their money. Most of these didn't have large families. Their priorities in life were the show and money. They spent much more than they really should have and when times got tough, they couldn't keep up. I think this helps illustrate the importance of conservative values.

    tags: foreclosures

    • Researchers at the University of Arkansas found that most households in foreclosure were relatively affluent and highly educated people with few or no children, living in geographical areas that experienced extremely rapid real estate appreciation.

      The researchers divided U.S. households into 21 life-stage groups, using data from a variety of sources. Then they identified which groups experienced the most foreclosures. The group with the highest foreclosure percentage was one they dubbed “Cash & Careers,” affluent adults born between the mid-1960s and the early 1970s.

      Members of this group had high household incomes, high education levels, high home values, and none to only a few children. Also, members of this group were classified as aggressive investors, most of whom lived in areas – California, Nevada, Arizona, and Florida – with rapid real estate appreciation.

      “The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable – will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008,” says Tim Yeager, associate professor of economics and lead author of the study.

      Source: University of Arkansas (05/06/2010)

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