Huge mortgage debts keep the housing market tumbling
Experts have been calling for the bottom of the housing market each year since the crash, and prices continue to tumble. Why? In an overwhelming number of cases, homeowners owe more on their mortgages than their houses are actually worth.
Experts have been calling for the bottom of the housing market each year since the crash, and prices continue to tumble. Why? In an overwhelming number of cases, homeowners owe more on their mortgages than their houses are actually worth.
According to real estate site Zillow, almost 16 million homeowners owe more on their mortgage than the underlying collateral is worth.聽 At the same time, the LA Times reports that 90% of these underwater homeowners are current on their mortgage payments.
Nevada has the highest percentage of upside down homeowners at 67%.聽 And while I don鈥檛 know for sure, based on stories from people in the real estate business in Las Vegas, there are likely thousands of homeowners in that city who not only are not current on their mortgage payments, but haven鈥檛 made a payment in many months.
Zillow has this very cool interactive negative equity map showing a large percentage of homes in Clark County Nevada are underwater more than double the value of the home..聽 Arizona鈥檚 Maricopa Country and Ventura County in California also have sizable populations of homeowners in the same predicament.
Alejandro Lazo writes for the LA Times,
While people aren鈥檛 walking away in droves, people are stuck where they are and not able to take advantage of job opportunities.
鈥淧eople don鈥檛 like to walk away from something they have put money into,鈥漅ichard Green, director of the USC Lusk Center for Real Estate, told the Times. 鈥淧eople seem to hate realizing losses.鈥澛� Yes, indeed.聽 In Chapter 9 of Walk Away I point out,
Experts have been calling for the bottom of the housing market each year since the crash, and prices continue to tumble because of this overhang in negative equity.聽聽 This year is no different.聽 Even investor savant Warren Buffett told CNBC he鈥檇 buy a couple hundred thousand houses if he could.
If Mr. Buffett comes calling, and the bank will approve the short-sale, take him up on it.