Problem with declining prices of homes by Jana Passova

According to the Fed, the Federal Reserve System, Americans' percentage of equity in their homes is bellow 50 percent. In the second quarter of 2007, the percentage was even lower only about 49.6 percent and in the last quarter, it was only about 47.9 percent. That is only a runover of a progress that has started since 1945 when dept of houses began exceeding equity of them. It is a year when the Fed started tracking the data. According to the Mody's Economy.com, there will be around 8.8 million of homeowners, it is 10.3 percent of homes, who will have zero or negative equity, at the end of the month. There is a risky situation for 13.8 million of American households that will be completely upside-down if prices fall 20 percent from present value. Case-Shiller index of home prices in the United States decreased 8.9 percent in comparison to the previous year. This was the deepest decline in history of the index. Case-Shiller index belongs to Standard and Poor's. The Mortgage Bankers Association thinks that an all-time high prize which was here in the last quarter of 2007 was caused by home foreclosures. There was 0.83 percent of all mortgages that get into foreclosure. It is expected that number of foreclosures will rise until homeowners will struggle with adjusting rates of mortgages. These can caused that monthly payments will become unaffordable to pay. There is also another category of homeowners. They are called "mortgage walkers", people who have no problems to pay for their mortgages, but they do not want to do it. This causes an increase of home disvalue as well.

by Jana Passova for PocketNews (http://pocketnews.tv)

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