The Bad - 10 Percent of Homeowners Have 0 or Negative Equity: The Good - 11 Trillion in Housing Equity
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Real Estate has been a very interesting story to cover in the past year. Some markets in the country are going to be in serious trouble while most of the country will continue to see steady and modest appreciation. The same can be said for homeowners.
Ten percent of the homeowners in the country are in a position of negative or minimal equity in their homes and are in a very fragile position. Through either poor timing or poor decision making they have very little equity in their homes. Any bad economic circumstances could put them in a position that could have dire effects on their future.
Meanwhile, the news that will get overlooked is that private ownership of homes accounts for 11 trillion in wealth of the country. That is double what it was 5 years ago.
So what we have is classic capitalism. The majority do very very well in a market, and a few do very poorly. No one was forced to buy at the top of the market. And most of the people who have will ride it out and gain equity in the coming years. And some will be wiped out.
Source: Detroit Free Press
Correction: The original post had 111 trillion as the total private property value, and error that has been corrected. Thanks to Robert Cote for pointing it out.
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Comment by Robert Coté on 26 February 2006:
Ummmm, that would be ELEVEN (not $111) trillion in equity associated with homes. Kinda changes your whole premise.
Comment by Robert Coté on 26 February 2006:
“Some markets in the country are going to be in serious trouble while most of the country will continue to see steady and modest appreciation.”
Wow, I thought it was a violation of the NAR code to make such predictions.
Comment by Robert Coté on 26 February 2006:
“Ten percent of the homeowners … through either poor timing or poor decision making they have very little equity in their homes.”
10%? That’s nearly every the equivalent of homeowner who purchased in the last 18 months. I was wondering however about pricing on the margin. How many “homeowners” owe more than the previous purchase price? After all if the nation’s housing stock can be valued based on the latest purchase price, why not the last purchase price? Clearly it is in between but why pick one and not the other?
Comment by Robert on 6 November 2007:
You know…the word “wealth” is almost like the word “f*ck”. I am living in the Cleveland area and let me tell you, the exodus from this area is obvious and the city is just bulldozing foreclosed homes since the poachers are stealing the copper piping, phone wire, and siding. Entire blocks of nothing but grass is a welcome attraction to the city let me tell ya.
Ain’t capitalism grand?