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Joined: 14 Jul 2007
Posts: 0
Location: Greater Boston
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Renting in Mass
Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011
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 Posted: Tue Jun 07, 2011 7:17 pm GMT Post subject: |
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| Ouch! And walking away isn't an option in Mass. |
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JCK
Joined: 15 Feb 2007
Posts: 559
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| Posted: Fri Jun 10, 2011 4:54 pm GMT Post subject: |
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Ouch indeed.
$120k average? That almost does not seem believable, unless most underwater folks have extremely expensive homes.
I wonder what the distribution looks like. |
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Boston ITer
Joined: 11 Jan 2010
Posts: 269
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| Posted: Fri Jun 10, 2011 6:47 pm GMT Post subject: |
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| JCK wrote: | | $120k average? That almost does not seem believable, unless most underwater folks have extremely expensive homes. |
If this includes HELOCs, then it makes sense. People lived beyond their means, but then, lost the cushion of rising prices. |
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Sat Jun 11, 2011 4:07 am GMT Post subject: |
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| What did the gains look like during the bubble years? |
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CL
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JCK
Joined: 15 Feb 2007
Posts: 559
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| Posted: Wed Jun 15, 2011 10:19 pm GMT Post subject: |
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| Boston ITer wrote: | | JCK wrote: | | $120k average? That almost does not seem believable, unless most underwater folks have extremely expensive homes. |
If this includes HELOCs, then it makes sense. People lived beyond their means, but then, lost the cushion of rising prices. |
I'm still not buying it. I'm sure there are folks who are $120k underwater, but it seems pretty hard to do, unless you're in a $800k+ home and your value has absolutely tanked.
Let's assume you HELOC'd yourself to 100% LTV at the peak. I'm going to through two test cases here: High value and low value:
Home worth $600k at peak. The nominal decline for the high tier in Boston from peak is about 10%, per Case-Shiller. So that home would be worth $540k today. That doesn't get you to $120k debt.
Home worth $300k at peak. This might be middle tier, but let's assume it's in the low tier, because that has shown a bigger decline. That home has declined ~30% from peak. You're still only in the hole by $90k.
Thus, it's tough to even come up with scenarios where you can be in the hole by $120k, unless you bought a very expensive home that tanked. I just can't see how that could possibly the average...
http://blog.redfin.com/boston/2011/04/case-shiller_boston_home_prices_inch_toward_a_post-peak_low.
I think there's something screwy going on with those numbers. |
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