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Depressing, but still necessary:
http://www.federalreserve.gov/releas...rent/z1r-5.pdf
For Q1 2008
Real Estate Assets, households: $19.7175T
Home Mortgage liabilities: $10.6006T
For Q4 2007
Real Estate Assets, households: $20.0464T
Home Mortgage liabilities: $10.5306T
Headliner says overall equity ownership of homes now only 46.2%
For 2001
Real Estate Assets, households: $12.3825T
Home Mortgage liabilities: $5.3728T
equity ownership in 2001 was 56.6%
It gets even better.
If we assume 1/3 of all homes are owned outright and also that these homes are price distributed as the national average:
$19.7175*.6667 = $13.145T
Average LTV across 2/3rds of all homes as of right now - i.e. all homes with any kind of mortgage...
Average LTV: 80.6! :eek:
Compared with 2001...
$12.3825*.6667 = $8.255T
Average LTV= 65
Now lets see if we have a 10% drop in home prices in 2008 and assume mortgage debt stays exactly the same:
$20.0464*.9 = $18.04T
$18.04T*.6667 = $12.03T
Mortgage debt constant at $10.6006T
Average LTV: 88 :eek::eek:
Equity percentage at that point would be: 41.2%
A demonstration of home leverage, in reverse, in action.
Of course, you say, there will be plenty of foreclosures/bankruptcies.
Possibly mortgage debt will fall, but presumably both the homes repossessed (and not yet sold) and the money loaned will also be removed from census and bank asset totals.
I also note that I'm assuming all junior lien secured loans such as 2nd mortgages, HELOCs, etc are included.
Not good...
http://www.federalreserve.gov/releas...rent/z1r-5.pdf
For Q1 2008
Real Estate Assets, households: $19.7175T
Home Mortgage liabilities: $10.6006T
For Q4 2007
Real Estate Assets, households: $20.0464T
Home Mortgage liabilities: $10.5306T
Headliner says overall equity ownership of homes now only 46.2%
For 2001
Real Estate Assets, households: $12.3825T
Home Mortgage liabilities: $5.3728T
equity ownership in 2001 was 56.6%
It gets even better.
If we assume 1/3 of all homes are owned outright and also that these homes are price distributed as the national average:
$19.7175*.6667 = $13.145T
Average LTV across 2/3rds of all homes as of right now - i.e. all homes with any kind of mortgage...
Average LTV: 80.6! :eek:
Compared with 2001...
$12.3825*.6667 = $8.255T
Average LTV= 65
Now lets see if we have a 10% drop in home prices in 2008 and assume mortgage debt stays exactly the same:
$20.0464*.9 = $18.04T
$18.04T*.6667 = $12.03T
Mortgage debt constant at $10.6006T
Average LTV: 88 :eek::eek:
Equity percentage at that point would be: 41.2%
A demonstration of home leverage, in reverse, in action.
Of course, you say, there will be plenty of foreclosures/bankruptcies.
Possibly mortgage debt will fall, but presumably both the homes repossessed (and not yet sold) and the money loaned will also be removed from census and bank asset totals.
I also note that I'm assuming all junior lien secured loans such as 2nd mortgages, HELOCs, etc are included.
Not good...
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