Earlier this week, I pointed out Diana Olick’s technically accurate but misleading post about the Housing Unoccupied Rate. (US Homeowner Vacancy Rate is 2.7%, Not 11%). I expect to revisit that int he future in much greater detail.

Today’s statistics lesson is from an error at HuffPo. It begins with the statement “Nearly one in every four homeowners across the country owe more on their home than it’s worth.”

That’s actually incorrect. It is based on the assumption that every home has a mortgage. What the author actually meant to write was “Nearly one in every four homeowners WITH A MORTGAGE owe more on their home than it’s worth.”

I see this exact error all the time.

Here is the actual data source: Over 30% of homes are owned outright, without any mortgage. The 2009 Census data shows that of 76,428,000 million occupied homes, there were 50,300,000 homes with some form of mortgage, and 24,206,000 houses owned free and clear — that is about 31.67% of homes.

Back out the unencumbered homes, and you end up with the figure that homes with mortgages that are underwater are about 17% of all homes — a little less than 1 in 6. (You can get this data from this Census page: Go to the spreadsheet marked “Mortgage Characteristics.”)

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UPDATE: The crack team at HuffPo immediately corrected this.  Nice!

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Source:
Learning To Walk: Fear, Shame And Your Underwater Mortgage
Ryan Grim, Arthur Delaney, Lucia Graves
Huffington Post, 02/ 3/11

http://www.huffingtonpost.com/2011/02/03/learning-to-walk-underwater-mortgages_n_818315.html

Category: Data Analysis, Mathematics, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “No, 1 in 4 Homeowners Are Not Underwater…”

  1. louis says:

    As long as those in power treat the underwater homeower like Lehman Bros do whatever you can to give back your property to the bank and reorganize your financial portfolio.

  2. rfranklin says:

    “Back out the unencumbered homes, and you end up with the figure that homes with mortgages are about 17% of all homes — a little less than 1 in 6″

    Did you you really meant to say that only 17% of homes have mortgages?

    ~~~

    BR: No, 17% of all homes are underwater. Let me see where that edit went astray

  3. carleric says:

    I appreciate the clarification but I always try to remember that most homeowners don’t care. They like where they live, like their homes and probably haven’t ever had their home assessed. Statistics in this area are simply for math wonks trying to find something to write about.

  4. jjay says:

    She sort of tells the truth.
    “Owe more on their home than what it’s worth.”
    It implies she is talking about a house that is encumbered with a mortgage.
    “Owe” is the key word.
    If you own your house free and clear, you do not ‘owe” anyone, so that excludes them.
    In any case if 25% of mortgaged properties are truly underwater, that is a serious problem.
    Looking at the Phoenix market, I am seeing some very low house prices and equally low rental rates,
    47% of home purchases in December were for cash.
    That is getting close to a bottom in Phoenix I think.

  5. call me ahab says:

    “If you own your house free and clear, you do not ‘owe” anyone”

    except the tax man- in the end we’re all renters unless you’re living in the street (or the woods)

  6. curbyourrisk says:

    Still a rather staggering fact if you ask me. YET,,,,,,we are not in a depression.

  7. Petey Wheatstraw says:

    “Back out the unencumbered homes, and you end up with the figure that homes with mortgages are about 17% of all homes — a little less than 1 in 6.”
    _______________________

    So, 83% of homes are owned outright? That doesn’t sound right. Are rental units included? If it is correct, there should be a huge and healthy HELOC market.

    I don’t have Excel on this machine, so I can’t access the data at the link.

  8. RadioFlyer says:

    Petey beat me to it, but it looks like BR made an error very similar to HuffPo’s.

    “Back out the unencumbered homes, and you end up with the figure that homes with mortgages are about 17% of all homes — a little less than 1 in 6.”

    Shouldn’t there be the word “underwater” in front of mortgages and “owner occupied” in front of homes? Also, 10.8 divided by 48 or 50 million is closer to 1 in 5 than 1 in 4 (of units with a mortgage).

    ~~~

    BR: Hit refresh — that was a later edit — it should be there

  9. dasht says:

    The 17% figure that is confusing people is because the correction itself contains a misstatement.

    It means to say that 17% of all homes are underwater. About 1 in 4 homes with mortgages are under water. About 68% of all homes have mortgages. About 17% of homes have mortgages where the remaining debt exceeds the apparent market value of the home.

  10. MktUpMktDn says:

    Does anyone else see the irony here??????

    Barry essentially talks about bad math and then says 17% is a little less than 1 in 6. Last I checked 1 in 6 16.666666666% and excuse my education, but I think 17% is greater than that. I know he said “about 17%,” but still that’s pretty damned funny.

    ~~~

    BR: No, that’s not at all what I wrote:

    Back out the unencumbered homes, and you end up with the figure that homes with mortgages that are underwater are about 17% of all homes — a little less than 1 in 6.”

    The number is a little less than 1 in 6 — “ABOUT” 17%.

    You really do not know what “ABOUT” means ?

    You think that 16.66% is somehow not “ABOUT 17% ?

  11. mwm says:

    I don’t believe CNBC ever corrected their story, but just pulled it from the site altogether.

  12. holulu says:

    I do not undrestand what Barry is saying here !!
    “and you end up with the figure that homes with mortgages are about 17% of all homes — a little less than 1 in 6.”

    Table 1-1 says that there are total of 125.5K units (76.4K Owner Occupied and 35.3K Renter Occupied) in the US.

    Table 3-15 says that of 76.4K Owner Occupied units, 24.2K is free and clear ( that is about 31% of owner occupied unites are free and clear). One piece of information is missing, what percentage of Renter Occupied units are free and clear ?

  13. philipat says:

    IMHO, this was more a sin of omissiom/imprecision, whereas Diana Olick’s claim was more a case of “Lies, Damned lies and statistics”?!!

  14. Jack says:

    OK, it looks like even you guys have trouble getting the number(s) right. Now think about the great (innumerate) unwashed and why a lot of them went underwater.

    This is complicated shit to a lot of people, some of whom don’t even know that it IS complicated.

    I’m from Jersey, you wanna talk about property taxes, property tax rates, assessments and revaluations and how they interrelate?

  15. BennyProfane says:

    Fine, but, seriously, how about second and more mortgages?
    If one is to argue that so many homes are paid for, why aren’t they on the market? One would think that they would bring quite a nice profit to the smart Boomers who succeeded in paying off the palace. Why is that market frozen?

  16. philipat says:

    Because, believe it or not, people actually live in them? Also, the top few percent can pay cash for multiple homes and don’t need mortgages like the great unwashed masses? Why pay compound interest if you have cash?