NEW YORK — Nervous homeowners and economic analysts have been wondering how much worse the housing market could get. On Thursday, they got an answer: plenty.
Foreclosures are at a record high. Home equity is at a record low.
The housing market is spiraling down with no end in sight — and taking people’s sense of economic security with it.
For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built.
The Fed reported Thursday that home owner equity slipped below 50 percent in the second quarter of last year and fell to just below 48 percent in the fourth quarter.
And that was just one example in a day of dismal housing reports.
The Mortgage Bankers Association said foreclosures hit an all-time high in the final quarter of last year. And pending U.S. home sales — those in the gap between when a buyer signs a contract and when the deal closes — came in below analyst expectations for January and remained at the second-lowest reading on record.
“There is no sign that we’re near the bottom in the housing market,” said Douglas Elmendorf, a senior fellow at the Brookings Institution and former Fed economist. “Housing prices will probably fall for a year, two or three to come.”
The trifecta of reports illustrates a housing market caught up in a “very negative, reinforcing downward spiral,” said Mark Zandi, chief economist at Moody’s .
Home equity, the percentage of a home’s market value minus mortgage- related debt, has steadily decreased even as home prices and homeownership rates jumped earlier this decade.
