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Us Homeowner Equity Lowest On Record

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Looks like no-one will have ANY equity by the time this crash is over, not to mention the UK, our market is about twice as overvalued. :ph34r:

Federal Reserve Report Shows Homeowner Equity Dipping Below 50 Percent, the Lowest on Record

NEW YORK (AP) -- Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.

Homeowners' portion of equity slipped to downwardly revised 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.

The news follows a report from the Mortgage Bankers Association on Thursday that home foreclosures skyrocketed to an all-time high in the final quarter of last year. The proportion of all mortgages nationwide that fell into foreclosure surged to a record of 0.83 percent, while the percentage of adjustable-rate mortgages to borrowers with risky credit that entered the foreclosure process soared to a record of 5.29 percent.

http://biz.yahoo.com/ap/080306/home_equity.html

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True. Our "values" are the highest in relation to wages on the planet. Massive LTVs and most of it sub-prime in the sense that it is dodgy (125%, SI, IO, BTL etc).

The huge amounts of MEW that have been going on has undoubtedly decimated equity to the point that, when the crash begins to peak, most will have walked away a lot better off than if they had stayed. If bankruptcy doesn't nail them that is.

This whole HPC is like a long drawn out nightmare that keeps getting more terrifying as the days roll on. The coming crash is going to dwarf anything that has gone before and it will be looked back upon in history as the greatest financial folly of all time and its chief "heroes" will be Gordon Brown, David Lereah, Finoulla of Nationwide, Krusty and Phil, Ben Bernanke (for not understanding that Greenspan's conundrum works both ways) and jumping jack flash (Paulson at the Treasury Dept) for telling everyone he favours a strong dollar.

In fact the brewing HPC is so bad it has rather taken away some of the fun for the Bears IMO. Still, some Bulls did warn us that we will live to regret causing it to be much worse than otherwise would have been the case. <_<

Edited by Realistbear

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It's interesting this isn't it?

All that money that's been earned by the working class over the last 50 years, where has it gone? Straight back into the pockets of the banks. The working/middle class have well and truly slit their own throats and now, coming into a time of relative hardship the cupboard is bare. Just think of all that money each month that could be spent on useful things and quality goods going straight in the banks back pocket. Madness. Absolute madness.

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This has gone too far, equity this low can't be good for anyone.

My thoughts have been UK equity would buffer the drop in prices when remortgages take place, but as we copy the US so far we may be even worse off.

Edited by maxwell

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U.S. Mortgage Foreclosures Rise as Owners `Give Up'

http://www.bloomberg.com/apps/news?pid=206...&refer=home

U.S. Stocks Drop, Led by Banks, as Foreclosures Climb to Record

http://www.bloomberg.com/apps/news?pid=206...&refer=home

5 million new home sales this year? Why with this mess would 5 million people buy new US homes.

It is truely mazing how stupid people are.

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This has gone too far, equity this low can't be good for anyone.

My thoughts have been UK equity would buffer the drop in prices when remortgages take place, but as we copy the US so far we may be even worse off.

100% correct, blah blah.

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This has gone too far, equity this low can't be good for anyone.

My thoughts have been UK equity would buffer the drop in prices when remortgages take place, but as we copy the US so far we may be even worse off.

...yes ....the rate of mewing here drove Gordos economic miracle ....and we couldn't have done without that...could we...?... <_<

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It's interesting this isn't it?

All that money that's been earned by the working class over the last 50 years, where has it gone? Straight back into the pockets of the banks. The working/middle class have well and truly slit their own throats and now, coming into a time of relative hardship the cupboard is bare. Just think of all that money each month that could be spent on useful things and quality goods going straight in the banks back pocket. Madness. Absolute madness.

A wise post. Thanks.

Any system where the money supply is controlled by a small group can lead to a situation like this.

Step 1: Banks expand supply, asset prices forced up. Debt levels increase.

Step 2: Banks cut supply, asset prices forced down. Debt remains. Oops, you are now a serf.

VMR.

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5 million new home sales this year? Why with this mess would 5 million people buy new US homes.

It is truely mazing how stupid people are.

Bear in mind that the US property bubble was based on the coasts, specifically California/Nevada and Florida, with a large element of sub prime loan sharking in the rust belt (North East states). A fair chunk of the fly-over states didn't have a bubble, or had just 10-20% rises over trend.

It's a bit like the way that BTL flats are the most extreme example of insane pricing (60-80% overvalued?) in the UK housing market, wheras for family homes outside of trendy areas, you are looking at perhaps 30-40% overvalued.

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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