Why are we now getting reports that 67% of all homes in Phoenix are now in negative equity?
How is such a report (made by Mr Jay Butler, Head of ‘Realty Studies’ at Arizona State University) , if anywhere near true, consonant with a recovery? Or is the ‘recovery’ just something for stocks and shares and the banks who trade them? Is that what I have not been understanding?
But even then I’m not sure I understand. Because those houses in negative equity will turn, if they haven’t already, into non -paying loans and then into foreclosures. And what happens when this blood bath of defaulting hits the banks which own the loans? In fact, why aren’t those losses being accounted for on the books of the banks already? Why haven’t these 67% of home loans in Phoenix started to be written down?
Could it be that the banks and the financial media are being a little slow to admit to the losses that will follow from such an astronomical rate of negative equity?
Or am I missing something here?