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Negative Equity: The Percentage of All Homes [INFOGRAPHIC]


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10 replies
  1. Pete Sambets
    Pete Sambets says:

    Is it just me that wonders what percentage of the 15.8% means nothing? There are many people who purchased at the height of the market, or refinanced and took the equity, that continue to make their mortgage payments and aside from their home value being less than what they owe, are doing just fine. I know, I know, you are going to say “but what if they were to loose their job?” Well, hasn’t this always been the case? There are many responsible people that took mortgages knowing that they COULD afford it, now find themselves underwater, are making payments and plan to continue doing so! This “under water” phenomenon reads in the media like a doomsday prediction and much like the “foreclosure reports” that indicate those in ANY stage of mortgage delinquency, as if they were all actual foreclosures, is fueling the fires of fear and continues to slow potential buyers from becoming home owners.

    Reply
    • Realtorsteveyoung
      Realtorsteveyoung says:

      I totally agree Pete. I am an investor and I own several homes that would be considered ‘under water’ , but I have them rented out and will continue to pay the mortages as agreed. Eventually, All will be good.

      Reply
  2. Joe Rivera
    Joe Rivera says:

    It’s no shame to rent instead of “owning” if you can’t buy a property in CASH. When you have a mortgage you don’t really “OWN” the property, the BANK does. Your mortgage payment is the “rent” you pay to live in that property. Renting is always, always cheaper than “owning”, no matter what the so called “experts” like to tell you. Sure, you miss out on some “benefits”, but the bottom line is that you can save some money and put that money away for retirement. Having some money in the bank, is better than owning a “pretty house” you can’t afford anyway. Pay CASH for property or do without it, and rent instead.

    Reply
  3. Dedra Brown
    Dedra Brown says:

    Negative equity is a very big concern. Many homeowners purchased their homes not just because of the pride of ownership, but as an investment in their futures. Traditionally, a home represented something that could be left behind for children, a nest egg from which to draw cash flow from equity in senior years, or as safety net from which to draw equity in case of emergencies. Those with ‘under water’ mortgages have the safety of knowing payments may never rise (maybe). Homeowners with negative equity lose the ability to take advantage of the current historically low interest rates because their homes won’t appraise. Perhaps if banks considered reducing the interest rates of the negative equity homes, even at the contracted values, homeowners would be able to take advantage of those savings. It’s a tragedy that many of these homeowners have to watch as the banks take advantage of the tax dollars that they paid to bail out the same banks that don’t consider helping them in return. Given a choice, I’m sure that responsible homeowners with negative equity would rather their tax dollars be spent saving their own situations than on the corporate welfare of saving large banking institutions with enough money to influence the markets of America’s capitalist(?) system.

    It’s a hard sell for many to stay in a home that’s worth less than 50% of what is owed. Financially, it doesn’t make sense. If you paid $450K on a home that is now only worth approximately $225K, the difference is stark and represents dollars that could easily be invested esle where. Assuming that both loans had an interest rate of 5%, P&I on the $450K mortgage is $2,415 and $1,207.85 on the $225K mortgage.

    Many have opted to short-sale, rent for three years and start fresh later. Others have opted to stay, pray and do what they feel is the responsible thing to do… although the idea of what is considered ‘responsible’ is subjective, given the level of ‘responsibility’ that some banks demonstrated as the executives received their bonuses on the backs of the American people.

    Reply
  4. paula
    paula says:

    The problem with 15.8% isn’t, who is or isn’t going to default, it is that people aren’t going to be able to “move up to a bigger home” until they have equity in their home again…and enough to pay the agent’s fee and have enough for a down payment for the next home. This is causing people who bought condo’s who are now underwater to put off having families(or bigger families) until they can buy a bigger home. While it might not affect those who are in the “home of their dreams” as much as those who are in starter homes who never intended to stay there more than 5 years. I’m just thankful I am in the 30% who don’t even have a mortgage any longer! Glad we’ve stayed put for 18 years and still have plenty of equity and our house is worth more than we paid for it…and we could sell it and move up if we wanted…but we’ll stay put…and buy our retirement home instead…prices are awesome for that right now! Buyers Market.. Yeah for me…sad for sellers.

    Reply
  5. Kevin
    Kevin says:

    I strongly disagree with Joe R’s comment that renting is ALWAYS cheaper than owning. I currently rent now because I have too, but I would give my left arm to buy another home because the payment would be several hundred dollars less for me per month. And that’s not even taking into consideration the tax advantages that go along with owning a home. The payment associated to that home ownership is relative to the individual. Therefore, you can’t paint a broad stroke as you just did with your statement. Furthermore, paying cash for a property instead of obtaining a mortgage would take it nearly impossible for a larger percentage of the population.

    Reply
  6. Lisa
    Lisa says:

    I’m both a realtor and a landlord, and based on what each tenant pays me and the value of each home, renting is SO MUCH MORE expensive! With house prices combined with VERY low interest rates, at least in my area of Northern VA it’s much cheaper to buy. I even advise my own tenants to buy now if they can!! A 167k loan right now is under $1000 payment, including taxes and insurance! And that gets a lovely 3 bedroom house in my neighborhood.

    Reply

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  2. […] current value has not kept pace with the market conditions. This graphic from my friends at the KCM Blog sums it up well. It’s the bad news/good news scenario. The bad news is that 22% of all […]

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