Almost 1 In 4 Mortgages Now Underwater
While I was driving back and forth all over the Chicagoland area today, the local radio stations were talking about rising home prices, increased home sales, and the beginning (even continuation) of a housing recovery.
Some people must be buying into this sentiment (or at least, fantasizing they were re-living the housing boom years again), as in one particular case, I noticed a home for sale the other day in a crime-ridden neighborhood of Chicago.
Asking price? Close to a half-million dollars.
All I know is, for that amount of money and in that location, the property had better come with its own live-in ninja.
Anyway, the headlines out in cyberspace tonight seem to echo such positive sentiment on the housing market.
“October sales gains lift hopes for housing market”
-Associated Press, November 23
“Home sales at 2-1/2 year high”
-Reuters, November 23
“Housing rebound continues: Prices rose for fifth straight month in September”
-DailyFinance.com (AOL finance site), November 24, 2009
Free Search 1000’s of Bargain Homes!
But I’m not so sure housing is indeed “recovering.” Especially after reading the following. From the Wall Street Journal’s James Hagerty and Ruth Simon today:
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn’t expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home’s value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American…
Just months after showing signs of leveling off, the housing market has thrown off conflicting signals in recent weeks. Jittery home builders and bad weather led to a 10.6% drop in new home starts in October, and applications for home-purchase mortgages have dropped sharply in recent weeks.
The housing saga continues…
Source:
“One in Four Borrowers Is Underwater”
James R. Hagerty, Ruth Simon
Wall Street Journal, November 25, 2009
November 25th, 2009 at 10:05 am
“Asking price? Close to a half-million dollars.
All I know is, for that amount of money and in that location, the property had better come with its own live-in ninja.”
——————————————–
For that amount of money, you can buy a whole stadium now.
Google “Pontiac + Silverdome” to read more about the following:
“The Pontiac Silverdome in suburban Detroit was built three decades ago for $56 million. Now it’s being virtually given away after a judge approved its sale for a paltry $583,000.”
Hope you have a pleasant, relaxing Thanksgiving with your loved one(s), Chris. Take some time to enjoy the one holiday that has not been ruined by commercialism. Eat, drink, be merry, then eat & drink some more!
-Mammoth
November 25th, 2009 at 7:19 pm
Thanks for the comment Mammoth. Never heard the news about the Pontiac Silverdome. Thanks for digging that up.
I wish you and your family a great Thanksgiving too!