Re: Not arguing with you
Same here.
I think the main issue is that what's in the original article is incomplete and unclear.
The article first states that ~5 million ARMs were reviewed, then later, as you noted, breaks that down into 3.7 million prime ARMS and 2.1 million sub ARMS which equals nearly 6 million, rather than 5.
One possibility is that some of the ARMS were Alt-A and included in both totals.
Regardless, it's worth noting that the average household moves about every 7 years, so that half of all mortgages are less than 7 years old (and refies takes that even lower). ARMs were running about 40% for most of that period, and there was some percentage in the earlier half, so my understanding is that the total number of homes with ARMs is closer to 12 million than 5 million.
Another consideration is that, while a lot of households are living in fully paid off homes, some proportion of those are somewhere between fixer-upper and tear-down - in other words, what I'm speculating here (I haven't anything handy to verify it) is that the mean value of the housing stock for households without mortgages is significantly lower than that of the mortgaged stock.
And I think the HELOC issue is also worth keeping in mind, too. The bottom line is that the percentage of the value of the housing stock that is threatened by ARMs is far higher than the 1% that article is trying to spin it as.
On a side note, Including counts on renter households without including the ARMs held by their landlords, is another problem.
I'm just shotgunning now, but my sense is that article (which you only posted, and certainly didn't write) was a fairly heavy handed attempt at putting a smiley face on the ARM crisis.
Regards,
Dan |
