The recent downturn in the housing market has everyone ringing the alarm bells in a frenzy of concern. Let's get real. The latest data from the 2005 American Housing Survey show that, in fact, few homeowners will be vulnerable to a pause or even a slip in housing prices. Here are the numbers on who will be hurt.
Homeowners without a fixed-rate mortgage: Of the nation's 46 million homeowners with a mortgage, 9 million (19 percent) do not have a fixed rate of interest. Instead, they have adjustable rate mortgates, balloon mortgages, or some combination. They will be hurt by rising interest rates.
Homeowners with little or no equity in their home: Of the nation's 46 million homeowners with a mortgage, 5 million (12 percent) owe 90 percent or more of the value of their home. They will be hurt by falling prices.
As the housing market finds a new level of stability, it is important to keep in mind that many homeowners (39 percent) have no mortgage at all, most homeowners with mortgages pay a fixed interest rate, and those with mortgages owe only 55 percent of the value of their home—in other words, they have enough equity to weather a substantial price drop.
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