For the next cocktail party: Some (sad) housing factoids …

According to the WSJ …

  • New home sales, pending home sales, and mortgage applications are down to a 13-year low
  • New home prices have fallen by an average of 30%, reducing home occupancy cost to 15% of family incomes, down from the conventional 25%.
  • About 11 million residential properties have mortgage balances that exceed the home’s value.
  • The total inventory of homes and the shadow inventory of 3.7 million empty (foreclosed) homes.
  • Eight million home loans are in some state of delinquency, default or foreclosure.
  • Another eight million homeowners are estimated to have mortgages representing 95% or more of the value of their homes, leaving them with 5% or less equity in their homes and thus vulnerable to further price declines.
  • If prices fall another 5% to 10%, an estimated 40% of American homeowners with mortgages in excess of the value of their homes.
  • Under the Home Affordable Modification Program, half of the borrowers have been redefaulting within 12 months, even after monthly payments were cut by as much as 50%.
  • A well-balanced housing market has a supply of about five to six months. These days the inventory backlog has surged to about a 12½ months’ supply. This explains why average sale prices have been declining for so many months. The high end of the market, in particular, is under great pressure.
  • Household formation (marriages) is also shrinking now, down to an annual rate of about 600,000, compared to net household formation in excess of a million annually during the bubble years.
  • $6 trillion of home equity value has disappeared, a loss that has had a devastating effect on consumer confidence, retirement savings and current spending.
  • Every 1% decline in home prices today lowers household wealth by approximately $170 billion …  and, each dollar lost in housing wealth lowers consumption by 5 cents.
  • A million-plus fewer homes are being built on on an annual basis from the peak years of the housing boom … with five people or more working on each home, we have permanently lost over five million jobs in residential construction.

Source: WSJ: The Recession and the Housing Drag, Sept 21, 2010

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s