5-27 Hanson…Per Zillow…>44% of US Homeowners are Zombified; Over 60% when including income/credit restrictions

http://mhanson.com/archives/1269 

Important research came out of Zillow last week on “effective” negative equity;  a term I coined relating to a novel thesis I have been working with for 3 years, which few understand, respect, or model…I suppose until now. (Zillow report copied below & link here: http://zillow.mediaroom.com/index.php?s=159&item=354 )

In short, per Zillow 44% of all mortgage’d homeowners — the core of US housing demand & supply — are Zombies;  60% when including those lacking sufficient income or credit needed for a loan.  As a result, the nations’ “Maximum Potential Demand” profile has been gutted.

1)  “Effective negative equity” is central to my “structurally broken housing market in need of years of de-leveraging before a “durable” bottom can occur”, theme. I have been pounding the table over “Effective” negative equity for years and finally it’s mainstream. Chances are this one report will be blown over. But like with ”shadow inventory” — when this thesis grabs hold — ultimately everybody will be talking about it, it will raise uncertainty, and economists will have no choice to respect the “math”.  And the math requires housing sector estimates have to be ratcheted down.  This literally changes everything with respect to housing ‘demand and ‘supply’ fundamentals.