More Problems in Housing?

Hagerty, James R. 2007. "Price Indexes Will Map Out Spread of 'Negative
Equity."
Wall Street Journal (22 December): p. A 2.
http://online.wsj.com/article/SB119829696940946747.html?mod=todays_us_page_one

"Last March, First American CoreLogic, a housing- and mortgage-data
supplier in
Santa Ana, Calif., calculated that nearly 7% of 32 million U.S.
households studied
as of December 2006 owed more than their homes were worth, based on
computer
estimates of the property values. The homes studied had mortgages
originated in 2004
through 2006, around the peak in the housing market. Since the end of
2006, U.S.
home prices on average have fallen nearly 5%, said Mark Fleming, chief
economist at
the firm. That suggests that about 11% of the homes studied now would
have negative
equity. An additional 5% or so probably have equity of less than 5%.
That doesn't
leave much cushion at a time when prices are still falling and most
economists don't
expect the market to hit bottom for at least another year."

"Economists at Merrill Lynch say home prices are likely to fall 10% in
2008 after
slipping 5% this year. Mark Zandi, chief economist of Moody's
Economy.com, a
research firm in West Chester, Pa., recently forecast that on average
U.S. house
prices will decline about 13% by the second quarter of 2009 from a peak
in the
second quarter of 2006. Declines will be much larger in Florida,
California, Arizona
and Nevada, as well as in the metropolitan areas of Washington, D.C.,
and Detroit,
he said."