There are many days when walking away and mailing in the keys is sorely tempting.
Maybe the kid in Alaska would take me in?
Another demographic I wish I didn't belong to:
MSNBC:
One in three mortgage holders still underwater
Zillow
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Got that sinking feeling? Amid signs that the U.S. housing market is finally rising from a long slumber, real estate Web site Zillow reports that homeowners are still under water.
Nearly 16 million homeowners owed more on their mortgages than their home was worth in the first quarter, or nearly one-third of U.S. homeowners with mortgages. That’s a $1.2 trillion hole in the collective home equity of American households.
Despite the temptation to just walk away and mail back the keys, nine of 10 underwater borrowers are making their mortgage and home loan payments on time. Only 10 percent are more than 90 days delinquent.
Still, “negative equity” will continue to weigh on the housing market – and the broader economy – because it sidelines so many potential home buyers. It also puts millions of owners at greater risk of losing their home if the economic recovery stalls, according to Zillow’s chief economist, Stan Humphries.
“If economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures," he said.
For now, the recent bottoming out in home prices seems to be stabilizing the impact of negative equity; the number of underwater homeowners held steady from the fourth quarter of last year and fell slightly from a year ago.
Real estate market conditions vary widely across the country, as does the depth of trouble homeowners find themselves in. Nearly 40 percent of homeowners with a mortgage owe between 1 and 20 percent more than their home is worth. But 15 percent – approximately 2.4 million – owe more than double their home’s market value.
Nevada homeowners have been hardest hit, where two-thirds of all homeowners with a mortgage are underwater. Arizona, with 52 percent, Georgia (46.8 percent), Florida (46.3 percent) and Michigan (41.7 percent) also have high percentages of homeowners with negative equity.
My wife and I decided not to just walk away. We're selling the house at a big loss and making up the difference to satisfy the mortgage. (When I met her, we both had a house. When we got married, I moved into her house and we tried selling mine. 5 years later, we're taking the big loss.) We just didn't want that on our credit history. We're lucky that we still have good jobs that affords us the luxury of taking that loss. We'll get a lot back at tax time since we were renting it out for a last 3 years, and we can now plan for the future, if there is one.
ReplyDeleteAnd there's also the option of renting. It's good to see that most people honor their commitments.
ReplyDeleteOne economist pointed out that every person who buys a new car with credit is underwater as soon as he drives the car home.