Monday, November 3, 2008
Did foreclosures really kill our economy? The numbers don't add up
According to this 2007 report by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, there are (were) 128,203,000 housing units in the United States. Of those, 64,231,000, or 50%, are owned free and clear.
If 1.2 million homes are in foreclosure at any point in time that would equate to less than 1% of all homes in the country or 1.9% of the 63,972,000 homes that have at least 1 loan on the property.
Then let's assume that each quarter 1.2 million homes go into foreclosure. That equates to less than 4% of all homes in the country (4.8 million homes) or 7.5% of homes with at least 1 loan on the property.
Are we really to believe that because 7.5 out of every 100 homes in the country went into foreclosure our economy was thrown into a recession, mutliple financial corporations were forced to shut down and the stock market tanked? Unless I'm severely off on my math the numbers just aren't adding up.
The $50 trillion credit default swap market theory on the other hand is beginning to make more sense with each passing day.