Because it's not just a matter of selling for a price which pays off the current note. It's a matter of also paying the realtor 6 percent and having enough left over for 10 percent down on the next purchase.
Half of all mortgage holders are in the situation where they would not have enough left over for 10 percent down on the next home. This is the key problem according to Mark Hanson:
"Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It's as if half the potential buyers in America died over a two-year period of time."
Read the full story about negative equity from Diana Olick here.
Technically 14.6 million are in negative equity on the note alone, but that's only 28.6 percent of homes with mortgages. 50 percent is more like 25.5 million homes with mortgages which cannot be sold without bringing money to the table for the next purchase. People are quite literally stuck.
To paraphrase Jonathan Swift:
Mortgages, the lifeblood of the nation,
Corrupt and stagnate in the veins,
Unless a proper circulation
Their motion and their heat maintain.
To paraphrase Jonathan Swift:
Mortgages, the lifeblood of the nation,
Corrupt and stagnate in the veins,
Unless a proper circulation
Their motion and their heat maintain.
