The Pied Piper of Doom claims he doesn't make "predictions," so to be fair, the following statement he makes this morning isn't a "prediction." It's a prediction:
[T]he fact of the matter is, barring some miraculous act of God in coming months, around half of all U.S. homeowners with mortgages (or, approximately 35% of ALL American homeowners—that’s somewhere in the neighborhood of 60-70+ million present and former members of the U.S. middle class) will be underwater (owing more on their homes than they’re worth) by the end of 2011. (Zillow’s telling us the number’s around 28%-29% as of Q4 ’10 and/or Q1 ’11; Rasmussen notes that more than half of the mortgageholders in the U.S. think they owe more on their homes than they’re worth, right now.... I believe we’re somewhere in-between, but well on our way to 50% of all mortgageholders being underwater, by some point later in the year.[my emphasis]
If you actually bother to read Zillow's release they say that
More than 28 percent of U.S. homeowners with mortgages owed more than their properties were worth in the first quarter as values fell the most since 2008 ....Experts quotes in the article expected housing prices to fall as much as 11% for the entire year of 2011, which is almost half over.
Homeowners with negative equity increased from 22 percent a year earlier as home prices slumped 8.2 percent over the past 12 months ....
Home prices were 33 percent below the July 2006 peak in February, according to the S&P/Case-Shiller Composite 20-City Home Price Index ....
The number of homes with negative equity rose to 16.2 million in the first quarter from 13.1 million a year earlier, Zillow said.
Let's do the math: according to Zillow, the ratio of underwater mortgaged households to decline in prices from peak was 22%:25%. Now it is 28%:33%. This is actually a fairly stable relationship of ~8:10, where 8/10% of homeowners go underwater for every 1% decline in prices off peak.
According to the Pied Piper of Doom, another 22% of homeowners are going to be underwater in their mortgages by the end of this year! (28% +22% = 50%). If the above ratio continues to hold, that means the Pied Piper of Doom is calling for a decline of another 25% in prices from peak in just the next 7 months!
This is patently ridiculous, and is triple or more the decline called for by the experts cited in the very article he highlights.
Meanwhile, in April Las Vegas had the highest number of house sales in five years.
P.S.: I know some readers don't like my ripping this particular blogger, but I reserve the right to go after him just as I go after Mish or Zero Hedge or any other math-challenged Doomer; and I know that some other readers also read him, still believing against all evidence that he has some credibility as a forecaster.
