[cnn-photo-caption image= http://i.cdn.turner.com/cnn/2008/images/03/07/art.sale.pending.gi.jpg caption=" A sale pending notice posted in front of a home in San Rafael, California."]
FROM CNN's Jack Cafferty:
Some more depressing news when it comes to our economy: Home equity for the average American has dropped below 50% for the first time since World War II. This means homeowners' debt on their houses exceeds their equity for the first time since the Fed starting tracking this stuff back in 1945.
For millions of people, this highlights the struggle to keep their homes as their mortgage rates keep going up and their property values keep going down.
Home equity has been declining for the last several years, but there are also other factors at work here, including low-and no-down payment mortgages and the increase in home equity lines of credit and refinancing during the housing boom.
Consider this: it's estimated that by the end of this month, 8.8 million homeowners, or about 10% of all homes, will have mortgage balances that are equal to or more than the value of their property.
Meanwhile, a new report shows home foreclosures skyrocketed to an all-time high in the last quarter of 2007. At this point, some 900,000 Americans stand to lose their homes to foreclosure.
Add in the Labor Department report this morning showing the worst job loss in five years last month (63,000 jobs) and you can expect things to continue to get worse on the housing front.
Here’s my question to you: What does it say about the state of our economy when home equity is at its lowest point since World War II?
Interested to know which ones made it on air?
David from Raleigh, North Carolina writes:
This problem was caused by people taking out exotic mortgages to buy homes that they couldn't afford. The remainder of the problem is caused by people refinancing all of their equity out of their homes thinking that their home was an ATM. The current problems were caused by irresponsible people making irresponsible decisions.
Bob from Philadelphia writes:
Jack, It means this country is in a whole lot of trouble. My mortgage payment in 2005 was $500 and now it's $854. I’m struggling to make it. My gas bill is $300 for 1 month. I'm afraid I'm going to be 1 of the 900,000 who will lose their homes.
Marjorie from Minneapolis writes:
It means both sellers and buyers have been stupid. It means the movers and shakers in the mortgage industry are greedy and stupid. Why can't people in the mortgage industry understand that "iffy" loans will always come back to bite them in the ***? In sum, there is SERIAL stupidity out there!
Ben from Wilmington, Delaware writes:
I took out a $150,000 mortgage in 2003 with a 30-year fixed rate at 9%. I knew exactly how much money I had to spend. Now they are telling me that my neighbor will get federal help from my tax dollars to bail him out of his mortgage choices. It seems I made the bad choice in paying all that extra interest up-front, rather than taking the adjustable rate.
Larry from Georgetown, Texas writes:
It is really easy to blame the current president. Sure he is in the "Twilight Zone" in regards to what is going on outside of Iraq, but he didn't sign the papers with an ARM rate. Our society is based on wanting more, more, more. There is a perfect saying for this: "You did it to yourself". Our economy is exactly where it needs to be to wake up America.