2.3 Million Mortgages Approaching 'Negative Equity'
The number of U.S. homes worth less than the debt owed on them reached almost 10.7 million, or 23 percent of all mortgaged properties, at the end of the third quarter, according to a report from First American CoreLogic, a Santa Ana, California- based real-estate research firm.
An additional 2.3 million mortgages are approaching “negative equity” as loan defaults rise nationwide, the company said Nov. 24.
“The weak housing market will contribute to high unemployment,” Nobel Prize-winning economist and Columbia University professor Joseph Stiglitz said in testimony to the Joint Economic Committee of Congress on Dec. 10.
“A distinguishing feature of America’s labor market is its high mobility,” he added. “But if individuals’ mortgages are underwater, or if home equity is significantly eroded, they will be unable to move, reinvest in a new home.” He urged U.S. lawmakers to use “overwhelming force” to reduce joblessness. The U.S. is also starting to mimic Europe by increasing the role of the central government in the economy, says Nobel Prize- winning economist Edward Prescott.