The authors matched answers from individualsrnto the decline in the housing price index in the zip codes where thernrespondents’ lived and analyzed them to determine if the decline affected attitudesrntoward buying versus renting a home, paying a mortgage, and commuting to workrnto reduce housing expenses.  </p

They found that recent housingrnmarket conditions had little effect on individuals if their exposure to thernhousing downturn had come through information only such as newspaper orrntelevision stories as opposed to personal experience.  Individuals who had not been impacted norrnanyone in their close circle been impacted by foreclosure or lost large amountsrnof money on real estate also had no change in attitudes toward the financialrnsoundness of homeownership or their willingness to undertake a commute tornreduce housing expenses.  There was,rnhowever, a link between a decline in housing prices and the amount these “informationrnonly” respondents thought a family should spend on a mortgage.</p

Where respondents or a family memberrnhad been personally affected by the housing crisis there were changes inrnattitude but the affect varied by age group. rnThe greater the drop in home prices in their location the less confidentrnthose under 58 years of age were in the soundness of buying a home.  Those over that age, even with personalrnexperience in the crisis, had more confidence in the wisdom of buying.  Furthermore, this confidence grew with the declinernin home prices in their location.</p

The authors conclude that, as those withrnfull information about the recession but no direct negative experience with itrndid not experience a shift in attitude, it may point to a more general rule;rninformation alone is not sufficient to change attitudes, only actual experiencernis.  Furthermore, the crisis’s effectsrnseem to be confined to attitudes toward buying a home and do not spill overrninto attitudes related to other homeowner decisions such as how much money onernshould spend or to commuting decisions.</p

That the decline had a negativerneffect primarily on younger person’s attitudes is consistent with the idea thatrnolder persons have a fixed set of beliefs and interpret the crisis as a temporaryrndeviation from a known trend.  Youngerrnindividuals and their lowered confidence would be consistent with the idea thatrntheir beliefs are still flexible and can change over time.

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