US living standards in 2005 continued downward trend

Several annual studies document the skyrocketing cost of housing, health care and energy, finding that millions of Americans are shouldering more debt in order to compensate for inflation and insufficient pay. By all indications, this trend will continue in 200.

One of the ways that American households have attempted to meet rising costs is by taking out second mortgages on their homes, which are used as temporary sources of extra funds. Harvard University’s Joint Center for Housing Studies, in its State of the Nation’s Housing report, found that net growth in second mortgage debt nearly doubled in 2005, to $178 billion. The Federal Reserve pegged total noncommercial mortgage debt at $641 billion by the end of the third quarter.

The heavy use of housing mortgages to meet daily expenses puts homeowners at considerable risk of an avalanche of debt or foreclosure in the event of an unexpected medical expense or job loss. It also increases the possibility that when the housing market deflates, as many economists project will occur in 2006, homeowners will be locked into paying enormously high amounts for homes worth significantly less upon resale.

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http://www.wsws.org/articles/2006/jan2006/hous-j16.shtml