Consumer Spending On The Rise

Consumer Spending On The Rise
By: Nicholas A. Dunlap, CPM

Screw the banks, feed the economy…or so the actions of our nations consumers most currently suggest. Data released today by Morgan Stanley shows that mortgage delinquencies are up 8% from mid-2007, but that consumer spending rose 3.6% in the United States last quarter. So instead of robbing Peter to pay Paul, we are not paying Peter to pay Paul. Same difference? Not necessarily.

We are experiencing an increase in “Strategic Defaults”, which sounds quite complex and sophisticated despite the fact that it is nothing more than realizing that the market value of your home is dramatically lower than the value of your loan and deciding to walk away from the property. This works for apartment owners and managers who will continue to welcome new renters into the marketplace. Statistics show that these consumers are paying other bills and satisfying their other obligations, but have simply stopped paying their mortgages. That said, they should be able to pony up the extra cash for a solid security deposit upon moving into an apartment home.

It’s no wonder REITs and other apartment owners are doing so well at present. Rents are down from recent years past, but occupancy is up from last year and there are a number of new renters in the marketplace to replace those who have left and continue to leave to become first-time homeowners.