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:
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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.
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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.
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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.
The topic of housing, mortgages, and delinquency rates is complex, and my background in finance and data analysis allows me to delve into this subject with confidence. Looking at the information you provided regarding Charles Smith's analysis, I can offer insights and expertise.
Firstly, the data presented seems to be sourced from the FDIC and Foresight Analytics, which are reputable sources in the financial industry known for their comprehensive data on mortgages and housing trends. These organizations collect extensive data on mortgage delinquency rates, nonaccrual status, and property occupancy.
The figures mentioned indicate a concerning trend of individuals residing in homes without making mortgage payments. For instance, the data reflects a total of 52 million residential mortgages outstanding in the U.S., with 14% being delinquent in the first quarter, amounting to 7.3 million mortgages. Of these, 5.5% were on nonaccrual status, representing 2.9 million mortgages.
The deduction made by Mr. Smith is intriguing. Assuming all loans on nonaccrual status represent vacant properties, it implies that at least 4.4 million households, or more than 4.4 million individuals, are occupying properties without making payments. This figure has escalated by 3 million since the end of 2007, indicating a substantial increase in such occurrences over time.
Smith's identification of this group as 'squatters' reflects the financial distress many households may be facing. It's crucial to acknowledge that while some individuals might exploit the system, the majority are likely enduring severe financial hardship.
Understanding the gravity of this situation requires an examination of broader economic factors, such as the 2008 financial crisis's aftermath, economic disparities, job loss, and other socio-economic challenges that could contribute to this alarming trend.
To sum up, the analysis draws attention to a concerning rise in mortgage delinquency rates and occupancy without payment, reflecting a larger economic struggle affecting millions of Americans. This demonstrates the importance of addressing financial hardships and ensuring support mechanisms to prevent further housing crises and assist those in need.
To break down the concepts:
- Mortgage delinquency rates: The percentage of mortgages that are behind on payments.
- Nonaccrual status: Mortgages where the bank has stopped accruing interest income because of non-payment.
- Occupancy without payment: Individuals living in homes without making mortgage payments, leading to concerns about financial distress and the term 'squatters' being applied.
- Economic factors: Broader influences like economic downturns, job losses, and financial crises that contribute to housing and financial struggles.
