Back to headline gloom in housing
Today’s lead headline in the SF Chronicle: “Home buyers going deeper into debt”. The article sites some harrowing stats:
- 21 percent of buyers last year took out mortgages with no down payment, soaring from just 4.5 percent in 2000
- The number of homes sold in the Bay Area dropped 19 percent last year compared with 2005
- median down payment fell 8.8 percent to $73,000 last year from $80,000 in 2005…the first annual drop in median down payments since 1995.
- 43 percent of people who purchased a house last year relied on a second mortgage
- number of California homeowners who fell behind on mortgage payments more than doubled during the last three months of 2006.
Okay so where is the good news? In short, there isn’t much except to say this is all backward looking stuff. Remember that what HAS happened is less important that what WILL happen. People are resilient and highly motivated to survive.
Clearly some will get caught having stretched too far but the issue really is about the broader impact on your local real estate economy. If you are living in a neighborhood where $3 million dollar houses regularly trade, this is irrelevant stuff. If you are living in an area where a missed paycheck is a real possibility, then the impact on the local housing economy (and hence prices) can be real.
So in examining the potential impact of these stats on your current situation, remember that markets are hyper local (assuming there isnt an exogenous shock) and that the past is not necessarily an indicator of the future. At My-Currency, we are delivering both hyper local intelligence and FORWARD looking data.