DB: Half of Mortgages Will Be Underwater by 2010
The Business Insider had a scary post yesterday about a recent report from Deutsche Bank predicting that 25 million homeowners, more than half of those with mortgages, will have negative equity by next year. According to the Case-Shiller Index, average peak-to-trough decline nationally as of April 2009 was 33 percent, with New York only off…
The Business Insider had a scary post yesterday about a recent report from Deutsche Bank predicting that 25 million homeowners, more than half of those with mortgages, will have negative equity by next year. According to the Case-Shiller Index, average peak-to-trough decline nationally as of April 2009 was 33 percent, with New York only off 21 percent. Deutsche Bank thinks that national number is heading to 40 percent, with the Northeast making up for lost time; in addition, it’s the blue-chip loans that will comprise much of the next wave of the negative equity plunge (only one in seven prime loans is currently underwater). And why’s all this negative equity so bad? “Bottom line,” writes Business Insider’s Henry Blodgett, “More negative equity will lead to more foreclosures.”
Half Of US Homeowners Will Be Underwater By 2011 [Business Insider]
“people at this level of the market have a cushion”
No, they do not. They REFI’d to peak comps with little or nothing to show.
***Bid half off peak comps***
So what, I’m “underwater” already and I don’t care — I like my house, I like my neighborhood, and I can quite easily afford it. Besides, if the banks really do start letting go of that stimulus money inflation will make studios in Canarsie a million bucks by 2015. Then who will even remember there was a bust?
What, BO? That people at this level of the market have a cushion? Yes, I do believe that and it is based on first-hand knowledge.
come on mopar you dont really think that do you?
“All the more reason that banks should start getting smart about lowering monthly payments for home owners, even if it means (gasp!) decreasing the principal slightly.”
If we both bought similar houses at the same time, and I’m having trouble making mortgage payments so the bank lowers both my payments and my principle, do you:
1. Cheer the bank’s good business sense.
2. Suddenly claim that you too are having trouble making mortgage payments and need the bank to cut you a deal as well.
OK, ok, so you’re a good person and choose option #1.
What option do most Americans who bought homes in the last 4 years choose??
When your business model is loaning people money and having them pay you back with interest, it is really bad for your long term business prospects when you let people pay you less money with no negative consequences.
This is why loan sharks traditionally break people’s legs when they start missing payments. Not because they think the guy with the broken leg will suddenly start paying them back, but because they think it will encourage their customers whose legs have not yet been broken to stay current with their payments.
Anyway, so half of mortgages will be underwater by 2011. Who cares?
This is only relevant if you have to sell due to illness, job loss, relocation, new baby, etc. And most people at the high end of the market have a big enough cushion to absorb the loss.
Or I should say, my “ex.”
“So if anyone’s a genius out there, I’d love to see the average home price computed using the average mortgage rate to see a chart of monthly payments.”
My boyfriend did this in 2004 using average national prices and mortgage rates, and found that it was cheaper to buy in 2004 than any time since the 1970s. So there.
Of course, prices have gone up somewhat since 2004.
“It was also said that, in 1989, the Imperial palace grounds were worth more than the state of California.”
Posted by: daveinbedstuy at August 12, 2009 9:41 AM
Thats not surprising as I think the State of California is only worth a few hundred thousand at best.