Estimates of Underwater Homeowners Overblown

The Wall Street Journal’s columnist Carl Bialik did a real service when he published his January 8, 2011 article “Housing Statistics Hit Rough Waters“. Mr Bialik did an exceptional job of dissecting the estimates of underwater homeowners (those who owe more on their mortgage than their house is worth) provided by companies like Zillow and CoreLogic and demonstrating: (1) Why the numbers of underwater homeowners are likely over estimated, and; (2) why it is likely that a large percentage of those homeowners are only slightly underwater and therefore unlikely to default on their mortgages.

It has been too easy for the media to jump on the bandwagon and trumpet claims of a continuous housing market decline just as it was easy for the media to herald the increase in home values that led to the bubble.

It is very much appreciated when a reporter is willing to delve in to the details to challenge the commonly held beliefs.