Comments on: Up to 60,000 households threatened by negative equity and unemployment http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/ Irish Economy | World Economy | Property Market | Economic Analysis | Ronan Lyons Fri, 27 Jan 2012 13:32:43 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: 10 things you should know about Ireland’s mortgage debt and arrears | Richard Barrow Utah Mortgage Professional http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-4024 10 things you should know about Ireland’s mortgage debt and arrears | Richard Barrow Utah Mortgage Professional Wed, 31 Aug 2011 11:06:43 +0000 http://www.ronanlyons.com/?p=406#comment-4024 [...] tallies with numbers I presented two years ago, which suggested that if the Live Register hit 500,000 and if house prices fell by 50%, we could [...] [...] tallies with numbers I presented two years ago, which suggested that if the Live Register hit 500,000 and if house prices fell by 50%, we could [...]

]]> By: Top Ten Facts in Relation to Ireland’s Mortgage Debt & Arrears | Ronan Lyons http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-4005 Top Ten Facts in Relation to Ireland’s Mortgage Debt & Arrears | Ronan Lyons Tue, 30 Aug 2011 10:10:18 +0000 http://www.ronanlyons.com/?p=406#comment-4005 [...] tallies with numbers I presented two years ago, which suggested that if the Live Register hit 500,000 and if house prices fell by 50%, we could [...] [...] tallies with numbers I presented two years ago, which suggested that if the Live Register hit 500,000 and if house prices fell by 50%, we could [...]

]]> By: Luis Dyer http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-1716 Luis Dyer Tue, 27 Apr 2010 15:45:50 +0000 http://www.ronanlyons.com/?p=406#comment-1716 Although a belated comment, I agree with Ronan--negative equity is not a problem if borrowers have stable income. In those cases, unless the borrower must move and leave the house, market losses will not materialize. Said that, we must recognize that a household without stable income is a problem regardless he/she has negative equity, so the discussion should focus on the borrowers' capacity to pay his/her debts (debt service to income) as equity position on a house is more related to incentives to repay a mortgage loan. Although a belated comment, I agree with Ronan–negative equity is not a problem if borrowers have stable income. In those cases, unless the borrower must move and leave the house, market losses will not materialize.
Said that, we must recognize that a household without stable income is a problem regardless he/she has negative equity, so the discussion should focus on the borrowers’ capacity to pay his/her debts (debt service to income) as equity position on a house is more related to incentives to repay a mortgage loan.

]]> By: les http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-363 les Sat, 06 Jun 2009 14:27:46 +0000 http://www.ronanlyons.com/?p=406#comment-363 Ireland in reality will be hit with a wave of repossessions as has occurred in USA. These repossessed properties will simply be sold off cheaply at loan value or below to reduce lenders exposure.Deflation will inevitably take a firm grip. Hold tight this is going to be a very very rough ride!!! Ireland in reality will be hit with a wave of repossessions as has occurred in USA. These repossessed properties will simply be sold off cheaply at loan value or below to reduce lenders exposure.Deflation will inevitably take a firm grip. Hold tight this is going to be a very very rough ride!!!

]]> By: karl deeter http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-344 karl deeter Thu, 04 Jun 2009 19:09:20 +0000 http://www.ronanlyons.com/?p=406#comment-344 negative equity only becomes an issue in three different scenarios: mobility, switching mortgages, and in any situation where there is financial hardship. In financial hardship negative equity only means you can't sell the house (for a profit) and move on. Even if you didn't sell at a loss [broke even], if you lost your job you would have to come up with rent. In many cases negative equity is part of the mix, not the genesis of the problem. in mobility issues you can rent out your home and rent elsewhere, if you want to switch loans.... ya can't. any other situations applicable? negative equity only becomes an issue in three different scenarios: mobility, switching mortgages, and in any situation where there is financial hardship.

In financial hardship negative equity only means you can’t sell the house (for a profit) and move on. Even if you didn’t sell at a loss [broke even], if you lost your job you would have to come up with rent. In many cases negative equity is part of the mix, not the genesis of the problem.

in mobility issues you can rent out your home and rent elsewhere, if you want to switch loans…. ya can’t.

any other situations applicable?

]]> By: Brian P Woods http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-343 Brian P Woods Thu, 04 Jun 2009 18:47:24 +0000 http://www.ronanlyons.com/?p=406#comment-343 Apposite comments. Neg. Eq. is an insidious, destructive process. It may be a temporary problem if you expect that inflation (increase in money supply) will reduce your debt burden. However, if it persists beyond 24 months, things will get quite intractable: owners cannot sell, except at a loss, mortgage lenders will be left with a real writedown (one that has to be noted on their balance sheet). Bad news all round. My understanding is that the median price of a residential property (in a specific area) should be not more than x3 the median wage in that area. Also, you should not be paying out more than 28% of your gross income on all the expenses associated with your home (mortgage, insurance, local gov taxes - whatever). If this is correct, then residential property prices have to decrease by significant margins. More bad news!! Brian P Apposite comments. Neg. Eq. is an insidious, destructive process. It may be a temporary problem if you expect that inflation (increase in money supply) will reduce your debt burden. However, if it persists beyond 24 months, things will get quite intractable: owners cannot sell, except at a loss, mortgage lenders will be left with a real writedown (one that has to be noted on their balance sheet). Bad news all round.

My understanding is that the median price of a residential property (in a specific area) should be not more than x3 the median wage in that area. Also, you should not be paying out more than 28% of your gross income on all the expenses associated with your home (mortgage, insurance, local gov taxes – whatever). If this is correct, then residential property prices have to decrease by significant margins. More bad news!!

Brian P

]]> By: The Irish Economy » Blog Archive » Unemployment and Negative Equity http://www.ronanlyons.com/2009/06/03/up-to-60000-households-threatened-by-negative-equity-and-unemployment/comment-page-1/#comment-340 The Irish Economy » Blog Archive » Unemployment and Negative Equity Wed, 03 Jun 2009 20:58:55 +0000 http://www.ronanlyons.com/?p=406#comment-340 [...] Ronan Lyon’s final post on this thread is available at this link [...] [...] Ronan Lyon’s final post on this thread is available at this link [...]

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