Earlier this week, it was pointed out that Diana Olick’s technically accurate, but misleading post about the Housing Unoccupied Rate was incorrect. (US Homeowner Vacancy Rate is 2.7%, Not 11%).
Today’s statistics lesson is from an error at HuffPo. It begins with the statement “Nearly one in every four homeowners across the country owe more on their home than it’s worth.”
That’s actually incorrect. It is based on the assumption that every home has a mortgage. What the author should have written was “Nearly one in every four homeowners WITH A MORTGAGE owe more on their home than it’s worth.”
We see this exact error all the time in the real estate/mortgage industry.
Here is the actual data source: Over 30% of homes are owned outright, without any mortgage. The 2009 Census data shows that of 76,428,000 million occupied homes, there were 50,300,000 homes with some form of mortgage, and 24,206,000 houses owned free and clear — that is about 31.67% of homes.
Back out the unencumbered homes, and you end up with the figure that homes with mortgages that are underwater are about 17% of all homes — a little less than 1 in 6. (You can get this data from this Census page: Go to the spreadsheet marked “Mortgage Characteristics.”)
UPDATE: The crack team at HuffPo immediately corrected this. Nice!