Homeowners Own Less Than In The Past

[REWahoo]

A Money article says the average US homeowner has 56% equity in their house, compared to 68% in 1973 and 80% in the 1950's. The bottom line:

"...if housing prices flatten out or decline, some newer homeowners who have built up little equity, could find themselves "upside down" -- owing more than their houses are worth.

And, if interest rates rise, homeowners with adjustable rate mortgages may not be able to keep up higher payments or sell the house for what they paid. Foreclosures could spike and the supply of homes for sale soar. That could send real estate market into a tumble. "

And the magazine will then be able to say "we told you so".

http://money.cnn.com/2005/08/04/real_estate/buying_selling/home_equity_falling/index.htm

REW

 

[JPatrick]

A Money article says the average US homeowner has 56% equity in their house, compared to 68% in 1973 and 80% in the 1950's.  The bottom line:

"...if housing prices flatten out or decline, some newer homeowners who have built up little equity, could find themselves "upside down" -- owing more than their houses are worth.

And, if interest rates rise, homeowners with adjustable rate mortgages may not be able to keep up higher payments or sell the house for what they paid. Foreclosures could spike and the supply of homes for sale soar. That could send real estate market into a tumble. "

And the magazine will then be able to say "we told you so".

http://money.cnn.com/2005/08/04/real_estate/buying_selling/home_equity_falling/index.htm

REW

The housing tumble is just a matter of time. Different magnitude for different areas of course. I heard a stat today that 41% of the new jobs created since 2001 were related to the housing segment.  Many of those jobs are probably at risk when housing slows.
Someone down the street put their home up for sale at what is clearly a price that is 25-30% high.  Apparently that is what they need to break even after several re-fi's and equity sucks.
Get ready to write the checks, cause it ain't selling at that price.

 

[Craig]

We took a very conservative position when we bought our rentals ... all cash, no debt. Clearly cost us big time Vs. using leverage for more homes in the market a couple of years ago ... but we sleep pretty well at night.

Saving as much as possible right now, and truly wondering if we'll see a market again where we can make profit on the buy, and pick up some good real estate for lower, much more reasonable prices ...

 

[JPatrick]

Real estate bubble could trigger global economic meltdown

By Paul B. Farrell, MarketWatch
Last Update: 6:58 PM ET July 17, 2005   
 

ARROYO GRANDE, Calif. (MarketWatch) -- Is there a global megabubble percolating? You sure think so. And you're wondering if there are ways to weather the coming storm.



I gave you a 20-question quiz on June 26, focused on 20 smaller bubbles, asking you to score each from 1 to 5 in terms of risk. A score over 50 put you in the megabubble camp. See previous Paul B. Farrell.

It turns out this is a real hot-button issue. I received 1,249 e-mails, three times more than on any column I've written in eight years. I read every response.

Eighty-six percent of you scored the bubble risks at 50 or more. And 39% of you scored between 75 and 100. Only 14% scored under 50.

Many of those who e-mailed identified themselves as officers in banks, securities and brokerage firms, professional financial advisers, corporate executives, federal and state government professionals, mortgage bankers, building contractors and real estate professionals. They scored the bubble risks as high.

Comments by real estate pros stood out because the housing bubble is likely to be the lead domino triggering a global economic meltdown. Real estate respondents expressed virtually unanimous concerns about this bubble.

"This bubble is no myth," wrote one California builder who said he had "been around for decades." "Real estate will go back to the Agricultural Age. Get ready for deflation."

"Warning signs [are] everywhere," said a New York mortgage banker. "Rates went through the floor, prices to the moon. I sold everything a year ago, paid off debt. The Great Depression will look like a cakewalk

 

[Mr._johngalt]

Real estate bubble could trigger global economic meltdown

By Paul B. Farrell, MarketWatch
Last Update: 6:58 PM ET July 17, 2005   
 

ARROYO GRANDE, Calif. (MarketWatch) -- Is there a global megabubble percolating? You sure think so. And you're wondering if there are ways to weather the coming storm.



I gave you a 20-question quiz on June 26, focused on 20 smaller bubbles, asking you to score each from 1 to 5 in terms of risk. A score over 50 put you in the megabubble camp. See previous Paul B. Farrell.

It turns out this is a real hot-button issue. I received 1,249 e-mails, three times more than on any column I've written in eight years. I read every response.

Eighty-six percent of you scored the bubble risks at 50 or more. And 39% of you scored between 75 and 100. Only 14% scored under 50.

Many of those who e-mailed identified themselves as officers in banks, securities and brokerage firms, professional financial advisers, corporate executives, federal and state government professionals, mortgage bankers, building contractors and real estate professionals. They scored the bubble risks as high.

Comments by real estate pros stood out because the housing bubble is likely to be the lead domino triggering a global economic meltdown. Real estate respondents expressed virtually unanimous concerns about this bubble.

"This bubble is no myth," wrote one California builder who said he had "been around for decades." "Real estate will go back to the Agricultural Age. Get ready for deflation."

"Warning signs [are] everywhere," said a New York mortgage banker. "Rates went through the floor, prices to the moon. I sold everything a year ago, paid off debt. The Great Depression will look like a cakewalk

Bubble Smubble.

JG