1945 is when data first was collected! Even more startling is that over ten percent of homeowners have zero or negative equity and that this figure is rapidly increasing. With a recession looming this can only make matters worse.
Homeowner Equity Below 50% for First Time Since 1945
The Associated Press
March 6, 2008
Americans' percentage of equity in their homes fell below 50 percent
first time on record since 1945, the Federal Reserve said Thursday.
Homeowners' portion of equity slipped to downwardly revised 49.6
the second quarter of 2007, the central bank reported in its quarterly
Flow of Funds Accounts, and declined further to 47.9 percent in the
quarter -- the third straight quarter it was under 50 percent.
That marks the first time homeowners' debt on their houses exceeds
equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to
trillion from a downwardly revised $9.93 trillion in the third quarter.
Home equity, which is equal to the percentage of a home's market value
mortgage-related debt, has steadily decreased even as home prices
earlier this decade due to a surge in cash-out refinances, home equity
and lines of credit and an increase in 100 percent or more home
Economists expect this figure to drop even further as declining home
eat into the value of most Americans' single largest asset.
Moody's Economy.com estimates that 8.8 million homeowners, or about
percent of homes, will have zero or negative equity by the end of the
Even more disturbing, about 13.8 million households, or 15.9 percent,
be "upside down" if prices fall 20 percent from their peak.
The latest Standard & Poor's/Case-Shiller index showed U.S. home prices
plunging 8.9 percent in the final quarter of 2007 compared with a year
the steepest decline in the 20-year history of the index.
The news follows a report from the Mortgage Bankers Association on
that home foreclosures skyrocketed to an all-time high in the final
of last year. The proportion of all mortgages nationwide that fell into
foreclosure surged to a record of 0.83 percent, while the percentage of
adjustable-rate mortgages to borrowers with risky credit that entered
foreclosure process soared to a record of 5.29 percent.
Experts expect foreclosures to rise as more homeowners struggle with
adjusting rates on their mortgages, making their monthly payments
unaffordable. Problems in the credit markets and eroding home values
making it harder to refinance out of unmanageable loans.