Economist’s Guesstimate: Half of Defaults Are Investors

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Intriguing bit of guesswork by economist John Husing, whose specialty is analyzing the Inland Empire: he says speculators account for up to half the defaults out there (and there are a lot).

Husing, quoted in Jon Lansner’s real estate blog in the OC Register: ‘If you look at the first quarter 2007, 3.2 percent of all homes sold from 2004 to 2006 (831,188) received notices of potential default (26,748). This included both families and speculators ... I’m going to guess that about half the homes in default may have been speculators, but that is a pure guess. I know from talking to developers that many speculators made no payments on the homes they acquired once they saw that prices were falling.’

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