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Tuesday, October 07, 2008

Homeowners with Negative Equity

by Calculated Risk on 10/07/2008 11:41:00 PM

From the WSJ: Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water'

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.
This is close to my estimate of homeowners with negative or no equity. These homeowners are at risk for default if they experience a negative event (like divorce or health problems) or they simply decide to mail in the keys. The number will probably rise to 20 million or more by the time house prices bottom.