Real Estate Marketing & Beyond
An article in realtor.com is calling underwater homeowners the invisible victims of the housing crisis. Millions of people have spent nearly 10 years keeping up with mortgage payments on homes worth less than their loans.
This is known as being underwater or in negative equity on a mortgage and while many people were never in danger of repossession, this didn’t stop them suffering. People who were unlucky enough to buy property at the height of the market saw their home values plunge, even though they had been responsible and had bought within their means. While it is easy to think that it is simply a case of continuing to meet mortgage repayments until the market recovers, this doesn’t take into account the need to move, perhaps for relocation for work. This isn’t even an option for anyone with an underwater mortgage and is a situation that trapped many people.
Residential Home
People with negative equity cannot sell their homes which means they cannot move for new job opportunities or will end up having to rent property or will even have to leave their family behind in search for work. It’s impossible to refinance these types of loans or obtain Home Equity loans, but now there is hope that the situation is changing.
According to real estate data firm RealtyTrac, the number of homes that were seriously underwater fell considerably during 2015 as real estate prices continue to recover from the lows seen in 2008 and 2009. By the end of last year there were 6.4 million homes in the US with at least 25% negative equity which equates to 11.5% of homeowners with a mortgage. This might sound like a huge figure until you consider it’s down from 18.8% the end of 2013 and down from 12.7% at the end of 2014. The good news is that many people are finding their property is no longer a burden, even in the hardest hit areas of the country.
Florida is a typical example where 19.8% of people with mortgages are still seriously in negative equity but this is down considerably from 24.7% last year. It is the same story in Arizona, another area that was hard hit as the percentage fell from 16.1% in 2014 to 14.3% last year, while in Georgia it fell from 19.2% to 14.1% in 2015. In spite of this many homeowners may still be years away from returning to positive equity, but at least things are moving in the right direction.
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