misunderstand The Issue of our times...
whither go the RE markets...?
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First, there are the questions...
Second, CR conclusions...
Third, the Graphs...
and
Then you NEED to read the reasons.
--------- CR's Conclusion
With falling house prices, the delinquency rate could start rising again since more homeowners will have negative equity. However just because a homeowner has negative equity doesn't mean they will default. It usually takes another factor such as loss of employment, divorce, or a medical emergency for the homeowner to default.
On the other hand, an improving labor market will help push down the delinquency rate. My guess is the overall delinquency rate has peaked, although I expect the delinquency rate to stay elevated for some time.
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Please, note, charts 2 & 3 show the early collapse of the Bad ARM & subprime RE loans in the sand states.
But, what we are NOW seeing is the second collapse - of the bad FMae&FMac RE loans and the unemployed.
What we do NOT see, yet, are the jumbo and above RE loans.
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Question #3 for 2011: Delinquencies and Distressed house sales
http://www.calculatedriskblog.com/2011/01/question-3-for-2011-delinquencies-and.html
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