Nearly 1 in 6 homeowners 'under water'

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Submitted by SD Transplant on October 10, 2008 - 8:54pm

Finally, the MSM is putting some good info out to the readers.

Source: WSJ

"The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.

The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

The comparable figures were roughly 4% of homeowners in 2006 and 6% last year, says the firm's chief economist, Mark Zandi, who adds that "it is very possible that there will ultimately be more homeowners under water in this period than (at) anytime in our history."

Among people who bought within the past five years, it's worse, with 29% under water on their mortgages, according to an estimate by real-estate Web site Zillow.com."

http://articles.moneycentral.msn.com/Ban...

Wow....I wonder when Zillow's estimates will reflect the real drop.

‹ Marketplace money talks to economist Thornberg Prices ›
Quote:"The relentless slide
Submitted by underdose on October 10, 2008 - 9:17pm.

Quote:
"The relentless slide in home prices ...

I love how the news keeps talking about the housing downturn. How often do you hear them characterize it correctly as the popping of the bubble? Almost never. But it isn't a downturn. It isn't a relentless slide. Those terms imply this came from outer space with no prior cause. It is a correction. The bad thing was the run up. Why doesn't the WSJ say "The aftermath of the relentless run up in home prices..."?

SD Transplant wrote: "No
Submitted by jpinpb on October 11, 2008 - 9:13am.

SD Transplant wrote:

"No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall."

That's rich. That's b/c the housing ATM is closed. Overdrawn. Less inclined to shop. BWAHAHA. No more HELOC = no more money to shop.

What a revelation. Cant spend
Submitted by peterb on October 11, 2008 - 9:24am.

What a revelation. Cant spend cause credits gone. WOW, who'd a thunk it? Having to spend only what's actually derived from one's income. That's down right unamerican. And it's now reality. Cash is king once more. Hail to the king. In God we trust, all others bring cash.

Oh, one other thing. Studies have shown that the number one reason for defaulting on a home mortgage is not the inability to pay, but rather owing more than the value of the home!! How many is "1 in 6" out there? Look for those to default, especially as unemployment's rising.

Wow. That's quite a bit more
Submitted by gandalf on October 11, 2008 - 3:45pm.

Wow. That's quite a bit more than what I would have thought. Makes sense though.

The collapse has been precipitous, steepness of the decline has really surprised me.

Scary part is it doesn't feel like bottom yet.

Check out the graph in the
Submitted by Dougie944 on October 11, 2008 - 4:36pm.

Check out the graph in the article and you wont have to use "feel" anymore to figure out the bottom.