Recently, a cable news network channel led a feature with the information that the percentage of American homes with negative equity (a home for which more money is owed than the property is worth) is the highest it has been in more than 50 years. The statement was made in an effort to lead the viewer into assuming that the national economy was in a melt down.
What piece of information was left out of this statistic?
A thoughtful viewer would have realized that we have just come through a period of time never before seen our economic history. For more than 10 years, home buyers have been able to purchase homes for no money down. In some cases, lenders have written mortgages for 125% of the value of the house. The proliferation of HEL(L) or Home Equity Loans and the number of programs encouraging home owners to unlock the hidden equity in their home have created an environment where having equity in a home is considered an unsound use of your capital. No wonder we have the highest level of negative equity in the home real estate sector.
The reporter tried to use the statistic to demonstrate the poor condition of the national economy. Anyone exercising their brain would realize that the statistic is more a reflection of many in our economy who can't or won't say no to buying what they can not afford.
How 'bout that hoop?
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