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How sustainable is this?

rose-colored-coolaidrose-colored-coolaid
edited October 2008 in Housing Bubble
In the news today, 1 in 6 homeowners is underwater.

Anyone looking for signs that the housing crash has run its course had better look elsewhere.

Comments

  • G4GeorgeG4George
    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.
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