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One in 10 home loans is under water: Economy.com
Fri Feb 22, 2008 1:33pm EST
NEW YORK (Reuters) - One-tenth of U.S. homeowners hold mortgages that
are larger than the worth of their homes, Moody's Economy.com said on
Friday.
Nearly 8.8 million homeowners, or 10.3 percent, are in over their
heads, its chief economist, Mark Zandi, estimates.
As a result, millions of U.S. homeowners have the incentive to abandon
their properties.
With an already unwieldy supply of homes for sale, more inventory
could prolong a recovery of the hard-hit U.S. housing sector,
suffering one of the worst downturns in history.
Zandi earlier this week told Reuters he expects home prices to drop by
20 percent from their peak in 2006.
He expects home sales to hit bottom this spring, housing starts to
reach a nadir this summer and house prices to trough in the spring of
2009.
The surge in foreclosures is putting further downward pressure on the
housing market because it adds to the inventory of homes for sale,
already at a lofty level.
Each foreclosure on a neighborhood block reduces the value of all
homes on that block by almost 1.5 percent, Zandi said.
(Re****ting by Julie Haviv; Additional Re****ting by Jennifer Ablan;
Editing by Dan Grebler)
=A9 Reuters 2007. All rights reserved.
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