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Marty Hunt
February 10, 2011 at 7:31 am
Lani, while I realize this post is pretty much the comments from Zillow, the example of 3 out of ten homeowners at a party being underwater on their mortgages in inaccurate at best.
First, all ten of those people would have to be homeowners and well over 30% of all people aren’t so there goes three of the ten “underwater” friends. And take all of those who don’t have mortgages at all…people who own their homes the old fashioned way, outright. I don’t have a stat on how many homes don’t have mortgages but in many areas I suppose 20-30% (or more?) of homeowners own their homes free and clear so there goes a few other neighbors in the party circle of ten who are homeowners and not underwater.
I suppose in the average group of ten friends got in a circle there would be less than half of the 30% mentioned in the ubiquitous headlines about the number of underwater mortgages. The consumer reads this, as you presented this, that 3 of 10 people are underwater and they don’t consider that five of ten don’t have a mortgage to begin with (renters or free and clears). So while 30% of all mortgages may be underwater, it is a gross overstatement that 3 out of 10 people standing in a circle at my party are “drowning”. Maybe 1.5 would be more accurate.
It’s not as much fun for Zillow or the news services to promote headlines that 15% of all homes are underwater (when we consider ALL homes). It’s much juicier to say “30% of all home with mortgages are underwater”. It paints a more desperate picture of a very sad and serious situation but I guess it grabs the readers to think 30% of people are drowning when it might actually be half that number.
In the industry we shouldn’t prmote the gloom and doom and no one seems to point out the fact that 3 of 10 friends really aren’t drowning. And it’s certainly not going to grab eyeballs to say 85% of all people are NOT drowning becuase 30% are renters and maybe another 30% own their homes outright.
Love AG and your posts!
Andrew Mooers
February 13, 2011 at 9:05 pm
Glad you pointed out there are a slew of home owners that have no mortgage. My state is 46th lowest for FSSR (foreclosure, short sale, repossession) tainted, caused home sales. In the best of economies, what is the “standard” percentage of FSSR anyway? It takes putting it all in perspective.