Foreclosures and a slow economy are taking their toll on the real estate market, there's no denying it. Let's all take a deep breath when we read the headline statistics about mortgage delinquencies, though.
The latest screamers are these:12% of mortgages are behind at least 30 days. 48% of subprime loans are behind on payments.
Those numbers are bad, but don't fall into the trap of thinking that everyone is falling behind on their payments. Statistics have a funny way of being manipulated to their user's benefit (including mine).
40% of homes in America have no mortgage. They are owned free and clear. This would mean that only 7% of homeowners are behind on their mortgages.
Subprime loans only account for about 15-20% of all mortgages (depending on who you believe). If half of them are behind on payments (7%-10% of all mortgages), these late subprime borrowers would only account for 4-6% of all homeowners (removing free and clear homes again).
So 7% of homeowners are behind, and most of those are the 4-6% that are subprime. That doesn't sound as bad, does it? Unemployment numbers are higher than that.
These numbers are not perfect, and neither is the road ahead for our market. Just take statistics with a grain of salt.
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