Dimensioning the Housing Crisis

摘要

With the apparent stabilization of home prices and the increase in existing-home sales, many investors believe that the housing market has bottomed and is beginning to recover. I believe that such optimism is premature. To be sure, there are many positives in the housing market: Prices have fallen significantly, housing is more affordable now than at any time in the past two decades, and the tax credit for first-time homebuyers has helped spur purchasing. Investors, however, are overlooking two critical factors: (1) the size of the "housing overhang" (i.e., the number of loans in delinquency or foreclosure) and (2) the borrowers with negative equity who are likely to default.