澳洲Australia property 14.7 Million (19%) Of US Mortgages Have $


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Could this post be accurate?



See original post here on Wall Street Cheat Sheet


An excel spreadsheet released from a recent briefing by Mark Zandi and Robert Shiller is making the rounds within the blogosphere. It provides a useful compilation of the underwater equity statistics in the USA.



The observations:

19%, or 14.748 million of the 77.570 million US households, are in negative equity

30.6% of the 48.243 million of homeowners with first mortgages are in negative equity

21.8% of the 67.578 million in owner-occupied single family homes are in negative equity

4.133 million of the 14.748 million of underwater homeowners are underwater by 50%+, meaning the owe more than 50% more than their homes are worth

Of the 50%+ underwater category, the worst states are California (672K), Florida (423K), and Texas (344K)

Total Negative Equity in the US is currently estimated at $771.1 billion

California mortgages have $234 billion in negative equity, Florida mortgages have $79 billion in negative equity, Texas mortgages have $48 billion in negative equity

$2.4 trillion in total mortgage debt is impaired due to negative equity  

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It would be interesting to see how the figures change over the next 12-24 months.  

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Very accurate.
The US also foreclosed on 1 million homes in 2010, with more than this expected in 2011.
A lot of the people who are in negative equity simple just save their money (rather than pay more mortgage), and walk away, or wait till the banks come for the house. With so many in negative equity, where do you think it will all end?
Worst, is the change on the US accounting rules in 2009 for some assets to mark-to-maturity the value (rather than mark-to-market), means on paper, the banks have a hugh amount of non-written off losses still (they had hoped that in the 2yrs now, prices would pick up). Wait till they need to start writing off losses in 2011/2012. Really, they say some of the banks are zombies still (that is effectively trading insolvent), but looking better as a lot of losses have not been written off.

We have only started with GFC people (it like the eye of the cyclone, where people become complacent and then get wacked from the other side). The rest will play out later in 2011, and 2012. I'm deleveraging. Will happily watch those overleveraged feel the pain, and then buy again in 2013.  

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the US isnt the one market. Id personally look for places without a boom or bust in their housing and thus little amounts of homes underwater. That way if you buy in the near term and their is this 'inevitable' bust, whatever decline you may experience in property will be more then covered by the flight to safety in the USD ( you make more on currency differential). Of course this doesnt take into consideration social and economic impacts regarding employment and crime etc that will be spurred on by further housing issues.

just my opinion.  

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That's a pretty scary report. I know several people in Perth that are in negative equity, but it's not by more than 10%  

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Yea well after the crash it'll be more than that.  

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obervations:19%, or 14.748 million of the 77.570 million US households, are in negative equityClick to expand...
so conversely 81% of households are in positive equity


4.133 million of the 14.748 million of underwater homeowners are underwater by 50%+, meaning the owe more than 50% more than their homes are worthClick to expand...
So 27% of those in negative equity are underwater by more than 50%.

This means that of total households 27%*19%= 5.1% of households are in negative equity by 50%.


Of the 50%+ underwater category, the worst states are California (672K), Florida (423K), and Texas (344K)Click to expand...
Correlates with those that had the greatest boom before the bust.


Total Negative Equity in the US is currently estimated at $771.1 billionClick to expand...
So what does the total estimated positive equity amount to?


Furthermore what are current construction levels as a % of 'normalised construction levels?' This gives an idea of the replacement cycle.

Not saying that things are good. Just giving an alternative: glass half full or glass half empty view.  

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Intrinsic_Value said: ↑
Total Negative Equity in the US is currently estimated at $771.1 billion
So what does the total estimated positive equity amount to?Click to expand...
The problem Intrinsic is that the banks will eventually have to write off the negative equity when in most cases they foreclose when people stop paying.
So look at it as $771.1 billion to write off still.

It does not matter what the positive equity is on other homes. The banks are still in s#### to the tune of $700B at currently price levels (maybe $1T should prices keep falling)  

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bluestorm said: ↑
The problem Intrinsic is that the banks will eventually have to write off the negative equity when in most cases they foreclose when people stop paying.
So look at it as $771.1 billion to write off still.

It does not matter what the positive equity is on other homes. The banks are still in s#### to the tune of $700B at currently price levels (maybe $1T should prices keep falling)Click to expand...
and what are current b&d debt provisions provisions that are already reflected in the financial statements?
what are total loans in circulation?

will all negative equity foreclose?

the whole picture must be looked at, not just the 'scare' $ figures.

PS i dont have the answers to the above questions.

At the moment i have only a small investment in Bank of America acquired at $12.something.  

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Firstly I'm with whitegoodman, and Intrinsic.

But overall look at it this way. Most people buy houses to live in. If this weren't the case then you would have 51%+ of the population renting. On this site of course most invest in housing. In the US especially most invest in stocks and bonds. Most Americans would think we are losers, buying negative cashflow property that is illiquid, overpriced, expensive to maintain with hideously expensive maintenance workers and very high taxes, and only likely to get possible capital growth years down the track.

I bought my current house about 4 years ago. I cover the mortgage and really don't care what it is actually worth.

Unless the banks have a major reason to call in the loans (and lets face it that is in no ones interest) negative equity is NOT scary.

UNLESS you lose your job etc etc. There is no question that is happening, but in most 'normal' areas it is not widespread - certainly not anymore - and the current indicators suggest the slow recovery has well and truly started.

I am out to buy the home or apartment block owned by the middle manager at the movie studio (or wherever) that has had to lay off 100 relatively highly paid staff.  

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19% of US mortgage holders probably don't care that thier home is in negative equity, either.  

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One needs to always bear in mind the differences in the loan documentation behind the housing loans/mortgages in the USA and Australia.

In the USA, your home mortgage/loan is invariably asset specific. You walk away from the house that has negative equity and the bank sells it and takes a loss you still get to keep the new house you have just bought, the boat, the car , the holiday house. Yes your credit is wrecked for 5 years but they do not bankrupt you.

In Australia they are whole of asset loans, so you default on your home loan and their is a shortfall they come after your other assets, the Mercedes goes, the boat goes and you may well be bankrupted so they can get part of your income to help mitigate the losses.

People in some states in America, where they have high negative equity and large mortgages, even if they can afford them, are saving up, buying a similar house down the street for half of what they owe on their existing house, get a loan in place, then walk away from the first house. In the end they have a similar level of amenity and will be mortgage free a lot quicker. The bank does not come after them for the balance.

Or they stop paying the mortgage, sock the cash away, when the bank eventually forcloses they have to rent (at a lower rent than the interest they are repaying) for 5 years or so until their credit is repaired and then they rebuy a similar house with much lower mortgage payments.

In Australia, people fight tooth and nail to keep their house, it is not the same in America, especially in the current circumstances.

The amount of negative equity if frightening for banks. If they have a reserving/capital ratio iof say 10%, that means they can lend out $90 for every $10 of capital they have. So a reduction of $700Billion - writing off that much capital - could lead to a shrinking of several trillion in loans that the banks can make.

cheers,

RightValue  

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RightValue said: ↑
In the USA, your home mortgage/loan is invariably asset specific. You walk away from the house that has negative equity and the bank sells it and takes a loss you still get to keep the new house you have just bought, the boat, the car , the holiday house. Yes your credit is wrecked for 5 years but they do not bankrupt you.Click to expand...
Incorrect. SOME states are non-recourse. SOME states have 'homestead' provisions which protect your PPOR in bankruptcy proceedings. These are STATE level laws and does NOT apply to the USA as a whole.

Do you realise the impact of having wrecked credit? Some jobs require credit checks. So does renting a property. It's not a 'yeah, I have negative equity, I'll just stop paying' flippant decision.

RightValue said: ↑
In Australia they are whole of asset loans, so you default on your home loan and their is a shortfall they come after your other assets, the Mercedes goes, the boat goes and you may well be bankrupted so they can get part of your income to help mitigate the losses.Click to expand...
As is the case in some US states.  

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Alexlee

True,

I stand abated..

However here is a list of non recourse states

Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (if non-judicial foreclosure is used)
Nevada - (lender can get a deficiency judgment)
New Hampshire
Oregon
Tennessee
Texas (lender can get a deficiency judgment)
Virginia
Washington
West Virginia


The following states allow non-judicial foreclosure:

Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming


Quite a list and not surprisingly the states with the worst property markets such as CA, AZ, NV, MI are among them, surprisingly FL is not.

What I sated about people doing is what I have read about from many different sources and people generally make thse moves before walking away so the credit effect is usually after they are set in their new strategy.  

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I count only 27 states on your list. Where are the rest of them?  

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It also makes me wonder how the banks were lending with low doc loans. Whos to say the house price wasn't $300,000 and the buyers loaned $400,000 so they could also buy a car and have a family holiday and purchase some furniture and it was all built in to the loan.

It's one of the reasons i hate broad brush strokes and statistics that don't give full information.  

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