Some Sobering Statistics on Housing
I received this in a Charles Schwab Investment Newsletter:
| Go to Home - Most Recent PostsThere are other lags still working through the system, many of which relate to the nature of lending that fueled the [housing] boom. As reported in the August 21 issue of Barron’s (“The No-Money-Down Disaster”):
• 32.6% of new mortgages and home equity loans in 2005 were interest-only, up from 0.6% in 2000.
• 43% of first-time home buyers (25% of all buyers) in 2005 put no money down.
• 15.2% of 2005 buyers owe at least 10% more than their home is worth.
• 10% of all homeowners with mortgages have no equity in their homes.
• $2.7 trillion in loans will adjust to higher rates in 2006 and 2007.In addition:
• By July the ratio of house prices to incomes had risen 30% above its prior peak in the early 1980s.
• A recent Fed study shows non-prime mortgages made up nearly 25% of conventional home purchase loans in 2005, compared to 11.5% in 2004.
• Real estate as a percentage of household net worth has jumped from under 25% in 2000 to 38% today.