More than 75 million American households own their own homes, according to the new American Housing Survey (h/t: Kevin Stolarick). About a third of these own their homes free and clear, and a whopping 64 million have equity in their homes, while 40 million have homes that are worth more than what is owed on their mortgages.
That doesn’t mean we’re out of the woods yet. Some 12 million households, or 16 percent, owe more than their homes are worth, according to data from Economy.com reported in the Wall Street Journal. The trouble in the housing market is a recent development, fueled by the bubble and lax lending standards of the mid 2000s. Among people who bought within the past five years, nearly 30 percent are under water, the Journal reports.
Prices are coming down fast regionally, falling back to 2003 levels in San Diego and Boston, and to 2004 levels in Las Vegas, Los Angeles, San Francisco, Fort Lauderdale, and Minneapolis, the Wall Street Journal reports. But in many regions they still have a long way to go. The graphic below, from the Journal, shows the amount housing prices have fallen already and the overall price change required to bring them back into line with historical levels of affordability. The story also notes that prices in close-in neighborhoods in “super-star” cities have held up best. Click here for more interactive graphics.
![[Home Economics]](http://s.wsj.net/public/resources/images/P1-AN180A_HOUSI_NS_20081007213613.gif)
October 8th, 2008 at 3:13 pm
It’s just so frustrating. You can’t win anymore. We just bought a great house at a great price at a decent interest rate (for that week). And the rates dropped a quarter of a percentage point the week after we closed. Sigh.
October 8th, 2008 at 9:08 pm
You can’t time housing or interest rates any more than any other market. If you actually got a great house at a great price, and the interest rate is near or below, say, historical average inflation, a different interest rate will make little difference in the long run. If you like living there and can make the payments, don’t sweat the interest rate or even price variations.
I bought my first house in 1972 and have moved several times since then, and the housing price trend has been consistently upward. Slower or flat during the recessions of the 1980’s and ’90’s, but always up over time. My first house would probably sell today for 30 to 50 times what we originally paid.
Of course a 1930’s type depression could impact this for decades, but absent that I wouldn’t worry about the minor changes.
October 9th, 2008 at 8:32 am
Fascinating piece but I’m confused on the numbers.
You say that 75 million own their homes. Next you say 64 million have equity in them while 40 million do not.
64+40=104 not 75. And you also mention 1/3 own them free and clear, which means we’re at 129 unless the 1/3 is included in the 64.
Am I misreading something?
October 10th, 2008 at 6:51 pm
Quote: “About a third of these own their homes free and clear”
This number was 40% in 2001 (HUD Survey, 2001). The next survey is in 2011.
October 10th, 2008 at 9:07 pm
WIthout a doubt, we are at an historical point with respect to property values vs. mortgages. In Canada we are fortunate to not have the same magnitude of sub-prime mortgages as in the U.S. Our banks are generally strong, and with the Canadian dollar falling recently our manufacturing and export markets should pick up. Hopefully, we will fair not too bad in all of this. It will be certainly interesting seeing what’s around the corner!
George