Underwater Nation
Barry Ritholtz at the Big Picture notes that household equity is at an all time low.
(The Fed) shows home owners equity as a percentage of household real estate at 47.9%, the lowest on record.
Going back 20+ years, this number was as high as 68.2% in 1986.
In other words, for the first time ever, banks/lender own more of the houses in America than the folks who live there do.
And, that's at current household prices. If the recent downward price acceleration gets any worse, we are going to see an even lower number.
Moody's Economy.com estimates that 8.8 million homeowners -- about 10.3% percent
of all U.S. homes
-- will have zero or negative equity by the end of this month.
Another 10-15 million households are at risk of becoming upside down if prices continue falling.
The Nattering One muses... so the banks own more residential equity than the people.
Is this any surprise? So much for the "ownership society" which we refer to as the "sharecropper society".
The sub prime crisis fallout will further yoke the middle class debtor to quasi indentured status, AKA The Sharecropper Society
This marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
Home mortgages held by households totaled $10.5 trillion on Dec. 31, according to Federal Reserve data.
The total value of equity fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
It is estimated that with another 10% decline, 12 million more households will go underwater.
Thats 20 million households or 20% of all households at a 20% price decline.
So what can we conclude? $10.5 trillion in home mortgages; $8 trillion are prime loans of which $5 trillion are held by FNMA or FHLMC.
FYI: $2.5 trillion are subprime; 2nd TD's $0.5 trillion; heloc $1 trillion; unsecured consumer loans $1 trillion.
If 20% of all mortgages are underwater, then $2 trillion in notes and deeds are not worth their face value...
where the collateral or underlying asset is worth less than the face value or loan amount.
You can impose the 20% rule on any lenders mortgage paper. At least 20% of their paper is worth 20% less than the amount due or value stated.
(The Fed) shows home owners equity as a percentage of household real estate at 47.9%, the lowest on record.
Going back 20+ years, this number was as high as 68.2% in 1986.
In other words, for the first time ever, banks/lender own more of the houses in America than the folks who live there do.
And, that's at current household prices. If the recent downward price acceleration gets any worse, we are going to see an even lower number.
Moody's Economy.com estimates that 8.8 million homeowners -- about 10.3% percent
of all U.S. homes
-- will have zero or negative equity by the end of this month.
Another 10-15 million households are at risk of becoming upside down if prices continue falling.
The Nattering One muses... so the banks own more residential equity than the people.
Is this any surprise? So much for the "ownership society" which we refer to as the "sharecropper society".
The sub prime crisis fallout will further yoke the middle class debtor to quasi indentured status, AKA The Sharecropper Society
This marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
Home mortgages held by households totaled $10.5 trillion on Dec. 31, according to Federal Reserve data.
The total value of equity fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
It is estimated that with another 10% decline, 12 million more households will go underwater.
Thats 20 million households or 20% of all households at a 20% price decline.
So what can we conclude? $10.5 trillion in home mortgages; $8 trillion are prime loans of which $5 trillion are held by FNMA or FHLMC.
FYI: $2.5 trillion are subprime; 2nd TD's $0.5 trillion; heloc $1 trillion; unsecured consumer loans $1 trillion.
If 20% of all mortgages are underwater, then $2 trillion in notes and deeds are not worth their face value...
where the collateral or underlying asset is worth less than the face value or loan amount.
You can impose the 20% rule on any lenders mortgage paper. At least 20% of their paper is worth 20% less than the amount due or value stated.
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