Charles Smith of Fort Pitt Capital Group points out that an enormous number of Americans are no longer paying for the properties they live in:
The above table from the FDIC and Foresight Analytics reveals the steady climb in the number of people living in their homes but not paying for them. The data, which go back 9 quarters (and include an estimate for the first quarter of 2010), show that 14% of the approximately 52 million residential mortgages outstanding in the U.S. were delinquent in the first quarter. This amounts to 7.3 million mortgages. Only 5.5% were on nonaccrual status, however. This amounts to 2.9 million mortgages.
Assuming that all loans on nonaccrual status represent vacant properties, it means at least 4.4 million (7.3 – 2.9 = 4.4) are occupied by people who are not paying for them, for whatever reason. This number has increased by 3 million since the end of 2007.
Mr. Smith equates this group with ‘squatters’ and believes their number has yet to peak. Most of these households are probably experiencing extreme financial duress. So it’s not as if most of these people are exactly cruising even if they don’t need to pay for their living space (though of course, there are likely to be a few gaming the system).
What we’d like to add is that 4.4 million households means that more than 4.4 million Americans might actually be in this situation, given that the average household has more than one person. So we think it’s fair to imagine that at least 4.4 million Americans are ‘squatters’ right now.
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