The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Tuesday, November 24, 2009
Almost one-quarter of mortgage borrowers are underwater
From The Wall Street Journal:
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As others have pointed out, the headline is at odds with the first paragraph. Is that 23% of homeowners or 23% of mortgage borrowers? Since a significant proportion own their houses free and clear, they're NOT the same thing. It's bad either way, but this is a high degree of sloppy on the part of the WSJ. --Jim A.
ReplyDeleteThe first paragraph seems to be a poorly-worded way of referring to "homeowners who have mortgages."
ReplyDeleteany idea how many "free and clear" owners are out there? I would guess less than a few years ago, thanks to the house-as-ATM boom...
ReplyDeleteI think the number will go even higher once the data catches up. In my local market, one-third of the homes are Short Sales.
ReplyDeleteThanks for sharing!
It would be interesting to know what percentage of those 23% mortgage holders are holding sub-prime. That might indicate their likelihood of walking away (their level of responsibility).
ReplyDeleteBefore the meltdown, sub-primes were a small percentage of all mortgages. 1/5th to 1/6th. That caused Bernanke to tell Congress that they posed no serious problem (just months before everything fell apart). My guess is that percentage is much lower today because those borrowers would have disproportionately washed out over the past year's turmoil.
Nonpartisan - did you see case shiller today. CAW CAW CAW!!!
ReplyDeleteIn all honesty, this surprised even me. I expected it to start back down this month, but no such luck. Looks like my call of 150 for a bottom may have been too optimistic.
partisan,
ReplyDeletethe economic fundamentals get worse every day. Yes, my month-by-month precitions are now off thanks to our nanny-state breastfeeding the Realtwhores, credit addicts, and their vile ilk...however, in the end, there will be hell to pay. I was not pessimistic enough with the end-game numbers. Teh bell is skewed, but it will toll even louder.
"I was not pessimistic enough with the end-game numbers. Teh bell is skewed, but it will toll even louder."
ReplyDeleteNo offense - but are you retarded, or are you just trolling? I mean seriously, the "bell will toll even louder"??? WTF do you get this insipid commentary?
Its clear that you ignore incomes, inventory, and other things that caused me to take the over on your absurd bottom call of 112. Do you ever look at fundamentals or is it just all catchphrases like "watch and learn" or "all bellcurves will complete"?
BTW - if you are just trolling, congratulations - youve had me going for the better part of 8 months that you believed everything you post :)
ReplyDeletePartisan - such hostility!! Are ye swimming naked?? Afraid of something? Underwater, perhaps? Look dude, I believe in what I say. The free lunch of breast milk is gonna have to end. The gluttony cannot go on forever. We have subsidized poor work ethic and mediocrity for too long. The piper will be paid. Mish, Schiff, Ron Paul, James Quinn - they make sense to me. Keynesian Economics goes against everything that makes senseto me. It is like credit default swaps - dreamed up on paper, seems infallible, yet the Ka-Poom occurs, and seems so obvious in retrospect. Maybe I am just hard wired to believe that you cannot spend your way out of debt??
ReplyDeleteThe granite countertops will go at firesale prices. Here are some fun facts and numbers---Unemployment: 10.2% and going up. FHA loans: defaulting at record rates. 23% of mortgages underwater. National debt at all time high. GDP on life support due to governemnt spending (and last months numbers revised down --oops!) You cite income and inventory - numbers and facts. please!! Oh, and regarding your joy over Case-Shiller today - have a looksie at the linkie--- enjoy!!
http://tiny.cc/t9Tzx
You cite income and inventory - numbers and facts. please!!
ReplyDeleteWhy should I give these to you? I mean the fact that you cite the national unemployment rate shows how clueless you are to local stats (take a guess how the DC metro area is doing)...
Besides, I gave these DC area stats to you once, but you just ignored them - they didnt fit your preconceived ideas of doom. Say, how did DC do in the Case Shiller numbers today?
Sorry, but id just as soon toy with you at this point than point the way forward with information. Its going to be fun watching your predictions go pop one by one by one (and watch you retrench firmer and firmer in your little doom hole) in the months and years to come.
forclose, forclose, forclose
ReplyDeletedang....i do keep forgetting..."it's different here!"
ReplyDeleteNo worries, just WAL - watch and learn...
ReplyDelete"The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
ReplyDeleteNearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic"
James - can I ask what the numbers were last quarter? If im not mistaken, 23% underwater is a MASSIVE improvement over last quarter when it was in excess of 30%. At this rate, there would be no one underwater in 18 months.
"At this rate, there would be no one underwater in 18 months."
ReplyDeleteHAHAHAHAHAHAHAHAHAHA
man, Im in stitches. You made my day buddy!
Anonymous said...
ReplyDelete"James - can I ask what the numbers were last quarter? If im not mistaken, 23% underwater is a MASSIVE improvement over last quarter when it was in excess of 30%. At this rate, there would be no one underwater in 18 months.
I don't track this every quarter. I just report it when I see the news. On 11/4/08, I quoted a news report that said 18% of homeowners with mortgages were underwater. On 3/6/2009, I quoted a news report that said 20% were underwater. So, this is up since then. As with this one, those two used First American CoreLogic as their original source.
I just tried looking for the original press release from First American CoreLogic, but I can't find it on their web site. However, via Google I found this:
"According to First American CoreLogic, nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September 2009. (As a point of comparison, using the previous methodology, which did not account for amortization or HELOC utilization, the Q3 negative equity rate would have been 33.8 percent.)"
Therefore, it appears that the decline you noticed is due to a change in methodology.
so I wonder if they kept the same methodology, are we up to about 50% of homes under water yet?
ReplyDelete