American Homeowners Are Finally Returning to Positive Equity

Source: Economist

 

 

Here is a fascinating albeit somewhat confusing chart: Total US residential equity relative to total mortgage debt.

The problem, even misleading part about the chart is some 30% of homes are bought with no mortgage — straight up cash deals.

 

Continues here

Category: 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.

14 Responses to “Are American Homeowners Back to Positive Equity? (No)”

  1. DeDude says:

    It gets even more complicated when you take into account that a substantial number of those cash purchased or mortgage free homes are owned by investment corporations. That particular part of the “home equity” has nothing to do with the consumer/homeowner being in good shape. I find the average mortgage as % of equity a more informative number. Calculated risk has a nice breakdown of the % of mortgages within “strips” of % home value. It gives an idea of how many people are how badly in negative or near negative equity (and things are improving).

    • rd says:

      The corporations don’t have “mortgages” but they probably have a significant percentage of their “cash” purchase coming from some sort of deb, just not 30-yr FHA mortgages..

  2. Conan says:

    Families Blocked by Investors From Buying U.S. Homes
    http://www.bloomberg.com/news/2013-10-24/families-blocked-by-investors-from-buying-u-s-homes.html

    First time buyers remain on the sidelines, representing 28 percent of all home purchases, which is below the historical average. The rate has fallen below 30 percent for 7 straight months. At the same time, cash purchases remain elevated and account for about 31 percent of home purchases. Investors snapped up 19 percent of the market, similar to the September sales figures.
    http://money.msn.com/home-loans/news.aspx?feed=OBR&date=20131120&id=17128803

  3. StatArb says:

    I live in 10021 zip code in a white glove building where apartments sell for much more than $1000/sf

    The large 2-BR apartments are selling at premiums to 2008 by a large amount , but the 1-BR’s and Studios are relatively flat , and in some cases down

  4. 873450 says:

    “Corporations are people, my friend. … Everything corporations earn ultimately goes to people. Where do you think it goes? … People’s pockets!”
    Mitt Romney

    Blackstone Group is 40,000 1-family homeowners.

    • Iamthe50percent says:

      And how much of that Blackstone Group money goes to the top ten and how much goes to the other 39,990? Doesn’t matter if your talking about employees or shareholders.

      • 873450 says:

        Corporations aren’t people.

        Blackstone isn’t 40,000 homeowners, just one opportunistic, deep pocketed scavenger swooping in after the kill to feast on bones in formerly middle class neighborhoods.

  5. DeltaV says:

    Since the housing recovery started in early 2012, the number of active mortgages (and their value) has actually gone down. In fact, the number of active mortgages is lower now than in 2012, 2011, 2010, 2009, … you get the idea. This implies that individual buyers for personal use are continuing to net withdraw from the market, and the recovery is really based on investment buyers, e.g., “REO to Rental” (hedge funds and private equity).

    What is also interesting is that of those “REO to Rental” companies that have disclosed their financials (I have looked at 3), they consistently make about 6% of their RE investment in yearly revenue (mainly rents), but have costs from 12% to 20% — they are all money losers. This was also stated by some national and local firms with long-term RE experience — the “REO to Rental” folks like to buy in quantities of 200 and above, do not seem concerned about the economics of the investment, and in general are not experienced in RE.

    • It started long before 2012 !

      • DeDude says:

        That is a good point. Do we have data on the volume of “REO to Rental” from each of the past 4 years. It may or may not have picked up drastically in the past 1-2 years. Part of that drastic jump in “home equity” is from increased home prices. But it looks like 3 trillion in about 18 months – could that really all be from price increases?

  6. crabman says:

    I think the Economist got this one wrong. They are comparing equity to debt, not home values to debt. Americans have been in the black all along.

  7. BuildingCom says:

    “Equity”…. LOL

    Housing is still the 800# gorilla in the room. And the correction still needs to occur and will.

  8. sdpost5 says:

    The secret to happiness is having a very low bar to compare yourself to. So, thanks, financial crisis.