Fannie Mae isn’t sure that housing is out of the woods….and lets be 100% honest…FANNIE MAE would know.
Remember, almost 100% of ALL new mortgages are backed by Fannie or Freddie.
Why is Fannie Mae concerned that housing may not have hit bottom..and more depreciation could happen? Simple, 19,000,000 (according to our friends at Zillow) underwater mortgages.
Realistically we will bump along the ‘bottom’ for years. 3-5 years at least. Until homes regain their value (inflation) the 10s of millions of underwater homes simply won’t allow for a true housing recovery.
Consider this number: 20%. For an owner to be able to afford to SELL their home and then buy their next home they need to have 20% equity in their current home. Selling fees can easily eat up 10% of a sellers equity..and then they will need at least 10% down on their next home..thus, 20%.
Do YOU have 20% equity in your home?