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8.8 million homeowners under-water

snigletsniglet
edited February 2008 in Housing Bubble
This article claims that about 10.3% of US homeowners (about 8.8 million) have homes that are worth less than the value of the mortgage. That's double the number of a year ago.

If the number of homes under-water can rise so rapidly with the slight decline we've seen in prices so far, I wonder what will happen when price depreciation really kicks in. Any guesses on what percentage of under-water home-owners will walk away?

http://calculatedrisk.blogspot.com/2008/02/moodys-88-million-homeowners-underwater.html

Comments

  • AlanAlan
    Nearly all of them. People who bought into the fad of "real estate always goes up" will buy into the fad of "walk away from your losses because you can."
  • rose-colored-coolaidrose-colored-coolaid
    Most of the homeowners I know fall under two very broad categories.

    1. Those who owe less on the house today than they did when they first bought it.
    2. Those who owe more.

    In category #1, are all the retirees who have paid off their home, which I think is most of the Depression/WWII generation. Also, in that category are a number of people from the baby boomer and gen x/y generations. The thing is that the younger you get, the lower the percentage in group 1 and the higher in group 2. Many of the people I know in their 40s owe more on their house today than they did 15 years ago.

    I would guess that few members of group 1 are at risk of negative equity, and that a very large percentage of group 2 are.
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