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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • Fewer Homes are Under Water 2 comments
    Aug 9, 2010 2:57 PM | about stocks: XHB, XLF, KRE, KBE
    Zillow.com reports that the percentage of borrowers who owed more on their mortgage than their house is worth fell to 21.5% in the second quarter.  It had been 23.3% in the first quarter.

    Stan Humphries, Zillow.com's chief economist, said that much of the improvement came from homes falling into foreclosure, wiping away negative equity. 

    At least the relative stabilization of prices associated with the two home purchase tax incentive programs, now ended, prevented many more mortgagors from falling into negative equity status.  With falling demand crushing new home sales the past two months and lower numbers of pending home sales contracts foreshadowing declining existing home sales, there is concern that home prices may start declining again in the coming months.

    A  consequence of a resumption of decline for home prices could see the number of under water home mortgages rising again.

    Source:  Realtor.org citing a Reuters article by Julie Haviv
      

    Disclosure: No positions.
    Themes: mortgages, under water Stocks: XHB, XLF, KRE, KBE
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  • Mark Bern, CFA
    , contributor
    Comments (5012) | Send Message
     
    Well, I can just hear all the hype that this will receive. This will undoubtedly be preached as another green shoot. The headlines will tout the drop in the number of homeowners underwater and the foreclosures will get spun into some sort of healing medicine that is finally working, if it is mentioned at all.

     

    There will be nothing about how the foreclosures will add either to the inventory of houses on the market to be sold or the shadow inventory of banks' REO. The end is not near. Or maybe it is. It depends on which end you're thinking about.
    9 Aug 2010, 11:13 PM Reply Like
  • f851963
    , contributor
    Comments (162) | Send Message
     
    Mark -- I believe the proper spin will be that, "Fewer homeowners were underwater in the second quarter."
    10 Aug 2010, 08:23 PM Reply Like
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