Housing Scorecard
Yesterday I came across a Chicago Tribune article that tallied up the damage in the U.S. housing sector last year. Kenneth Harney, the author of the piece, talked about how Queen Elizabeth II once famously referred to 1992 as her “annus horribilis,” a year in which almost everything went wrong. The same could be said about the housing sector in 2007. According to the Tribune piece:
• American homeowners lost $160 billion in net equity in their homes from Q1 to Q3 2007.
• When looking at homeowners’ equity stakes (property value minus mortgage balances), it dropped to 50.4% from 56.1% as recently as 2002.
• Foreclosures on single-family homes reached 1.69% in Q3 2007, “the worst in decades,” according to the paper.
• 5.6% of all U.S. home mortgages were delinquent by 30 days or more in the same period.
• 1 out of 5 adjustable-rate subprime loans was delinquent by the end of Q3 2007. The Tribune noted that the proportion was higher in Michigan (26.2%) and Massachusetts (almost 23%).
• Home sales “tanked in almost every local market that had seen hyperinflation in prices in the boom years of 2001 to 2005. Local declines in excess of 50 percent are not unusual in parts of California, Florida, Nevada and Arizona.”
• One-quarter of new foreclosures in Arizona, California, and Nevada, involved “flippers” who gambled- and lost.
• The national inventory of unsold homes jumped to 10.8 months.
• Housing and mortgage-related job losses have been “staggering, into the hundreds of thousands by some estimates, and extend to the highest executive ranks of Wall Street’s and banking’s most prominent firms. When you lose billions on dumb bets on subprime mortgage securities, you can also lose your head.”
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