When Does 2 -1 = 0?

Housing Market Math, Circa 2010

When does 2 - 1 = 0?

When a two-income family that's "upside down" on their mortgage loses one of those jobs ("upside down" is Realtor-speak for owing more on your home than it's worth).

The first wave of foreclosures largely consisted of marginal borrowers -- putting very little (or nothing) down -- paying inflated prices in especially overheated housing markets.

By contrast, today's second wave of foreclosures disproportionately consists of homeowners who are financially stretched because they've lost their job(s).

That's from Bob Peltier, Edina Realty President & CEO, who spoke at City Lakes' weekly meeting this morning.

That unfolding, second wave of recession-driven foreclosures is likely to be one of the dominant stories of the 2010 housing market (as I've blogged previously, I'd add to that list Option-ARM's, strategic defaults, and the economy generally).