Consumers, using lessons learned from when the housing bubble burst, are weighing decisions more carefully, blunting the so-called wealth effect.
By Andrew Khouri, Los Angeles Times
June 22, 2013
Dean Schefrin bought a home at just the right time.
He and his then-fiancee purchased their four-bedroom Thousand Oaks home last August, catching the rising wave of Southern California home prices. Less than a year later, he estimates his home is worth about 25% more than he paid.
“It is just a really nice feeling,” the 45-year-old said. “It’s sort of peace of mind.”
The last time housing prices rose this quickly, homeowners rushed to tap their home equity to spend on renovations, cars, vacations, even second homes. The economy soared — until it crashed in a heap of debt.
Five years after the financial crisis, a new sobriety among homeowners and lenders has taken hold, tempering economic growth as consumers keep more money in their pockets.
Schefrin is putting off getting a pool he wants in his backyard until he saves enough cash.
“It’s going to be based on the work income and not the value of the house,” he said.
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