\nDrops to 46.2 percent in first quarter \u2014 level not seen since end of WWII\n<\/p>\n
\nNEW YORK – The equity Americans have in their most important asset \u2014 their homes \u2014 has dropped to its lowest level since the end of World War II.\n<\/p>\n
\nHomeowners\u2019 portion of equity slipped to 46.2 percent in the first quarter from a revised 47.5 percent in the previous quarter. That was the fifth quarter in a row below the 50 percent mark, the Federal Reserve said Thursday.\n<\/p>\n
\nThe total dollar value of equity also fell for the fourth straight quarter to $9.12 trillion from $9.52 trillion in the fourth quarter, while Americans\u2019 total mortgage debt rose to $10.6 trillion from $10.53 trillion.\n<\/p>\n
\nA homeowner\u2019s equity is the market value of a property minus the mortgage debt. And homeowners\u2019 percentage of equity has declined steadily even as home values surged during the housing boom due to a jump in cash-out refinancing, home equity loans and an increase in 100 percent financing.\n<\/p>\n
\nExperts expect equity to decline further as falling home prices erode the value of Americans\u2019 largest asset, dragging more homeowners \u201cupside down\u201d on their mortgages.\n<\/p>\n
\nAt the end of March, nearly 8.5 million homeowners had negative or no equity in their homes, representing more than 16 percent of all homeowners with a mortgage, according to Moody\u2019s Economy.com Chief Economist Mark Zandi. By June 2009, he estimates that will increase to 12.2 million, or almost one out of every four homeowners with a mortgage.\n<\/p>\n
\nBut to put that number in perspective, one out of every three homeowners own their properties free and clear, with no mortgage at all.\n<\/p>\n
\nStill, Zandi said, \u201cFor most, their home is their key asset. If they have no equity in their home, likely their net worth is negative too. Their entire balance sheet will be underwater.\u201d\n<\/p>\n
\nThe report also showed that Americans\u2019 total net worth dropped to $55.97 trillion in the first quarter from $57.67 trillion.<\/p>\n
Zandi expects prices to fall 24 percent from peak to trough. Last week, Standard & Poor\u2019s\/Case-Shiller said its national home price index fell about 14 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988.\n<\/p>\n
\nPrices nationwide are at levels not seen since the third quarter of 2004.\n<\/p>\n
\nHomeowners with no or negative equity are more likely to fall behind on their mortgage payments or, in frustration, mail the keys to the lender and walk away from their mortgages, a phenomenon more lenders are seeing. This will only increase foreclosures, which have been surging the last two years, and further exacerbate the housing downturn.<\/p>\n","protected":false},"excerpt":{"rendered":"
\nDrops to 46.2 percent in first quarter <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"persona":[],"class_list":["post-3341","post","type-post","status-publish","format-standard"],"acf":[],"yoast_head":"\n