The Never-Ending Foreclosure: How can the country survive the next economic crash if millions of families still haven’t recovered from the last one?

In retrospect, refinancing their home was a bad idea. But the Santillan family never thought that it would lead them to foreclosure, or that they’d spend years bouncing among hotels and living in their car. The parents, Karina and Juan, never thought it would force three of their four children to leave the schools they’d been attending and take classes online, or require them to postpone college and their careers for years. They did not know they would still be recovering financially today, in 2017. “Having lived through everything I see life differently now,” Karina Santillan, who is now 47, told me. “I’m more cautious—I probably think through financial decisions three, four, five times.”

In the big picture, the U.S. economy has recovered from the Great Recession, which officially began a decade ago, in December of 2007. The current unemployment rate of 4.4 percent is lower than it was before the recession started, and there are more jobs in the economy than there were then (though the population is also bigger). But for some, the recession and its consequences are neverending, felt most strongly by families like the Santillans who lost jobs and homes. Understanding what these families have experienced, and why recovery has been so evasive, is key to assessing the economic risks the nation faces. Despite ever-sunnier economic conditions overall, the Great Recession is still rattling American families. When the next economic crisis hits, the losses could be even more profound. “There are people who still, to this day, are trying to get back on their feet,” Mark Zandi, the chief economist of Moody’s Analytics, told me. “These households are slowly finding their way back, but they’re still on a journey.”

Their struggles are present in the economic data, if you look closely enough. The labor-force participation rate, which measures the share of working-age adults who either have jobs or are looking for them, fell sharply during the recession, and remains at a decades-long low, at 62 percent. Lower-income families aren’t just not doing better; they are actually doing worse: The average household income of the bottom 20 percent of Americans fell $571 between 2006 and 2016, according to Census data, while for the top 20 percent of Americans it grew by $13,749.

The housing market, too, has not fully recovered from the recession. Although population growth means there are 8 million more households in the country than there were in 2006, there now are 400,000 fewer homeowners. Before the recession, the homeownership rate in the United States was 69 percent, according to the Federal Reserve. Now, it’s 63 percent. A drop of six percentage points may seem small, but it represents a tremendous amount of pain and suffering for the millions of families who once had homes and no longer do. These are all families, like the Santillans, who saw the money they had accumulated disappear, who saw their credit scores ruined, who have not caught back up to where they once were.

Perhaps worse, millions of families like the Santillans essentially put their lives on hold for years during the recession, figuring out how to survive rather than how to thrive. The foreclosure crisis and subsequent recession didn’t just deplete families’ wealth—the instability it caused also meant that families like the Santillans lost out on years of productive economic activity. For example, the family’s oldest son, whom they call Juanito to distinguish him from his father of the same name, graduated from high school in 2009, the year the family lost their home. His grades suffered as he watched his family struggle to hold on financially, and though he wanted to attend college, he knew the family couldn’t afford it. This year, Juanito, who is now 27, finally enrolled in the film school he had wanted to attend in 2009.


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