Tuesday, November 11, 2008

Housing Revisited...

It's been a little while since we've talked housing. Housing has been covered far and wide by every major media outlet, but today there was a great chart that highlights just how deep the problem remains.

"Because of plunging home values, almost 90 percent of homeowners here owe more on their mortgages than their houses are worth, according to figures released Monday. That is the highest percentage in the country. The average homeowner in Mountain House is “underwater,” as it is known, by $122,000."

The best part of this article however is the fantastic chart which shows the number of homes with negative equity across the US. Clearly the problems in California, Nevada, Florida, Ohio and Michigan are substantial. However, I think this may just be the tip of the iceberg. If national housing prices start to take a realistic double dip we could see huge numbers of homes underwater in states like NJ, PA, VA, TX, CO, etc..

I think it is interesting to note that NY seems to be a relatively healthy real estate market with only 4% of homes facing negative equity and just 70k homes underwater. I'll note however, that Buffalo, Rochester, Syracuse, are more economically akin to Cleveland and Detroit than NYC/Long Island. So, I think there is little disconnect in the data. I also think that slower sales in the upstate region has masked the weakness in the market (fewer sales = fewer data points to use for comparrison) and they are probably underestimating the number of homes underwater in Upstate NY.

FYI - There are still over 2,300 listings in the local Multiple Listing Service - about 130% more than there were 4 years ago.

Cheers!

1 comment:

good custom essay writers said...

I think while typically a result of fluctuating asset prices, negative equity can occur when the value of the asset stays fixed and the loan balance increases because loan payments are less than the interest, a situation known as negative amortization.