Posted on 03/06/2008 9:36:15 AM PST by Toddsterpatriot
Federal Reserve Report Shows Homeowner Equity Dipping Below 50 Percent, Lowest on Record
NEW YORK (AP) -- Americans' percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday. Homeowners' percentage of equity slipped to a revised lower 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter -- the third straight quarter it was under 50 percent. That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
Home equity, which is equal to the percentage of a home's market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.
Economists expect this figure to drop even further as declining home prices eat into the value of most Americans' single largest asset.
Moody's Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak.
The latest Standard & Poor's/Case-Shiller index showed U.S. home prices plunging 8.9 percent in the final quarter of 2007 compared with a year ago, the steepest decline in the 20-year history of the index.
“That’s great Mister Smart Guy.
OK, maybe you know a lot about real-estate, but you sure as hell don’t know squat about getting copy syndicated with the AP.”
I suppose I could skew everything, too. I do happen to work in the real estate industry, and I know exactly what’s been going on the last few years.
I guess I should just say somebody’s gotta pay the piper. The media can’t have it both ways.
Exactly right. The old time news industry is where there's been big time mass lay-off's, and you'll never see any tears from me for those lost jobs..
People like my parents bump the average. We built their home ourselves. They bought the two acres for $5,000 back in 1967 and we built the house in sections as the money came in. It is a nice 2,500 sq. ft. rambler.
They just sold off one of the acres for $525,000.
It’s people like an old friend of mine that drops the average: They bought their home in the mid-1970’s for $17,000. They currently owe more than it’s worth thanks to refinancing-as-ATM - $280,000.
This is really stupid.
Watch the government will bail them out too for their STUPID decisions.
>>and yet, Dems still pledge to raise taxes on America for their healthcare initiative<<
Talk of a health care initiative only works when there is a chicken in every pot. When things go bad, people worry about other stuff. ‘Course, if you elect someone that says big bad business will pay for it all...
Um... How well off did you have to be to get a reverse mortgage, Option Arm, 120% NINJA liar loan? Are these well off Americans being foreclosed just because they don't feel like paying their mortgages? Maybe it is all going to vacations, furs and Grey Poupon?
I am not referring to people who have reverse mortgages. The number of reverse mortgages out there is very small in comparison to all the other outstanding home loans. Very small.
Is this just a regular annual revision similar to what is described here? Is so, I'll just continue to revise graphs when they get too out of date and I have the time. Regarding household net worth, I revised that graph just a couple of quarters ago. Anyhow, thanks for the heads up.
I don’t know for today but in 2002 it was over 65% (a little more in the east) of peoples equity. That number referres only to homes that are used by the owner.
There’s a strong tendency for building expensive homes in swabia - a quite rich area of germany - there the numbers for home equity that are NOT in self usage are higher then in other areas. In the relatively poor east homes and land is so cheap - it’s the first thing people will buy - especially because they know times when private property was extremely restricted.
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