How sustainable is this?
Posted:
Fri Oct 10, 2008 12:11 pmby rose-colored-coolaid
In the news today, .
Anyone looking for signs that the housing crash has run its course had better look elsewhere.
Re: How sustainable is this?
Posted:
Mon Oct 13, 2008 8:47 amby G4George
As I read this I asked myself the question of whether the definition of negative equity includes the realtor's fees. A quick example should illustrate what I am thinking. A house is valued at $500K and the outstanding mortgage is $475K so there apppears to be positive equity. If you add in a transaction cost of 6% to cover the realtor's fee then the house is only worth $470K to the owner and the house owner has negative equity.
If the 1 in 6 does not include the transaction costs to sell the house then my guess would be that many more than 1 in 6 homeowners are underwater. To find out how many we would need to understand how many homeowners have a mortgage that is approximately 6% below the price the property could be sold for.