Effects of real estate bubble
Consider the following chart:
A retracement of values from $199,000 in 2006 to (199-109)*0.618 + 109 or about $165,000 per home in
2008 or 2009 would seem to be a reasonable expectation.
We should plan accordingly. Any home which has a current mortgage of more than 165/199 = 83% of its
value in 2006 should be under water by 2009 unless the mortgage is paid down enough to avoid that
outcome. This effect will be felt most in those parts of the country where values increased most in recent
years. This is Nevada, Florida, California and Arizona.
smithers.co.uk/files/07.09.17%20Welling@weeden.pdf
Next
Consider the following chart:
A retracement of values from $199,000 in 2006 to (199-109)*0.618 + 109 or about $165,000 per home in
2008 or 2009 would seem to be a reasonable expectation.
We should plan accordingly. Any home which has a current mortgage of more than 165/199 = 83% of its
value in 2006 should be under water by 2009 unless the mortgage is paid down enough to avoid that
outcome. This effect will be felt most in those parts of the country where values increased most in recent
years. This is Nevada, Florida, California and Arizona.
smithers.co.uk/files/07.09.17%20Welling@weeden.pdf
Next
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