“The bulk of Southland homeowners who sold their homes in October doubled their money, according to data released Tuesday, suggesting that the housing slump may not be as big of a drag on the economy as feared.”

Homesellers earned 80%(Riverside) – 90% (San Diego) profit on October sales. So far, most sellers are seeing big profits from their sales.

“Cagan has said that the homeowners who have risky adjustable-rate mortgages and are expected to face higher monthly payments represent a fraction of the total housing market.

His earlier research shows that about 13% of people who bought homes in Los Angeles and Orange counties from 2004 through the first half of this year using adjustable-rate mortgages are likely to default, resulting in $12 billion in losses spread over five years, out of some $223 billion in total loans.”

I think that 13% number is going to climb to 90% by the end of 2007. IMO, it is only 13%, because only a small percent of loans have reset.

We know that the majority of ARMs are resetting over the next 2 years, so the number of ARM resets to far is very small. As an example, and I don’t have the actual numbers, let’s imagine that 15% of ARMs in San Diego are resetting this year, and 13% defaulted. That is almost a 100% default rate. What happens when the other 85% of ARMs reset? I would be flabbergasted if more than a few percent of households could swing a 50% – 100% increase in their mortgage payments. With prices back at 2004 levels, how many 2004 or 2005 buyers can refinance? They just don’t have the equity.

The article stated that in San Diego, a little over 6% of sellers lost money on their house sales.

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