Half The Country's Mortgages Are Underwater

[DT-waw]

http://www.zerohedge.com/news/got-primex-short-half-countrys-mortgages-are-underwater


On US totals, if you figure average house prices use conforming loan balances, then a repeat buyer has to have roughly 10 percent down to buy in addition to the 6 percent Realtor fee to sell. Thus, the effective negative equity target would be 85%. You also have to factor in secondary financing, which most measures leave out.

Based on that, over 50 percent of all mortgaged households in the US are effectively underwater — unable to sell for enough to pay a Realtor and put a down payment on a new purchase without coming out of pocket. Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It's as if half the potential buyers in America died over a two-year period of time.


no one understands a simple thing...
the supply, or number of real estate is skyrocketing. anywhere on the globe. well, maybe except haiti and nepal.

the number of mansions, big houses, the number of people who own 5+ homes is shooting through the roof.

the prices can only go down.
unless israel provokes iran , which may nuke this little country and few U.S. big cities. war is good for the economy, you know.

 

[denner]

And a few years ago on here guys thought it was "impossible" to have inflation WITHOUT rising housing prices. Lo and behold we've seen commodity inflation, significant increases in the cost of health insurance, property taxes, tuition prices...etc, etc. (Of course some of the wonks around here only get alarmist when they see "wage inflation" just like their Fed overlords).

One thing almost no one could have anticipated some years back were the number of strategic defaulters / "squatters" and the chain of title problem that continues to tie up the courts. ZIRP and record low interest rates, billions thrown into the abyss to prop up real estate prices just in the past two years and yet here we are...

 

[maxpi]

Quote from denner:

And a few years ago on here guys thought it was "impossible" to have inflation WITHOUT rising housing prices. Lo and behold we've seen commodity inflation, significant increases in the cost of health insurance, property taxes, tuition prices...etc, etc. (Of course some of the wonks around here only get alarmist when they see "wage inflation" just like their Fed overlords).

One thing almost no one could have anticipated some years back were the number of strategic defaulters / "squatters" and the chain of title problem that continues to tie up the courts. ZIRP and record low interest rates, billions thrown into the abyss to prop up real estate prices just in the past two years and yet here we are...

What you are saying is that it's unbelievable how distorted simple economic things have become. It is purely because of social tinkering by the Left and a mindless drive to deregulate by the Right.. Oh and don't forget the "we're from the government and we're here to help" part... talk about a perfect storm!!

 

[oldtime]

bullshit, how many of those owners refinanced at the top? Nobody that put 20% down and faithfully has paid their mortgage every month for the last 10 years is underwater.

 

[jprad]

Quote from oldtime:

bullshit, how many of those owners refinanced at the top? Nobody that put 20% down and faithfully has paid their mortgage every month for the last 10 years is underwater.

I guess those are the other 50%...

 

[oldtime]

Quote from jprad:

I guess those are the other 50%...

it aint a housing crisis, it's a money management crisis.

What difference does it make if you are underwater anyhow? Other than you can no longer borrow on it.

My father bought a brand new house for 30k, lived in it 30 years and sold it for 30k. He figured that was a pretty good deal because it was new when he bought it and used when he sold it.

 

[peilthetraveler]

Half the country's mortgages are underwater? Could be worse....we could be in Fukushima, Japan where half the country's houses are underwater. =P

 

[nkhoi]

ThaiLan is much worse
Thailand Floods 2011: Water Swamps Two-Thirds Of Country

 

[Illum]

They will stop being underwater once they take their well earned loss by selling to a more evolved human.

 

[Covertibility]

<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=CPILFESL&scale=Left&range=Custom&cosd=2000-01-01&coed=2011-09-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=pc1&vintage_date=2011-11-09&revision_date=2011-11-09>

When someone says no inflation, it's implied in the conversation that core will stay well behaved around 1.5-2%, not that it will hit zero. Looking at the above chart, we've didn't get that hyperinflation the economically illiterate were ranting about years ago.