Wednesday, February 3, 2010

More homeowners walking away from underwater houses


There is an interesting story on the NY Times today about homeowners walking away from houses that are increasingly under water.

"New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying."

"The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance.

They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages."

If more and more people walk away from their homes, don't expect prices to go up anytime soon.

22 comments:

Leigh said...

I'm shocked that folks don't consider walking sooner than the 75% mark! Maybe when the value was at 50% of the mortgage some were still hoping for a rebound?

Happy Renter said...

It'll be real interesting to see what prices do after the tax credit runs out in April. Especially if interest rates go up.

insomnibus said...

From this forbes article, Portland is one of the TOP 10 CITIES to go from renting to buying right now. From the article:

"The U.S. government has pushed hard to make homeowners out of one-third of Americans who still rent their homes. It introduced and later extended a tax credit for first-time home buyers, and has kept federal interest rates at their lowest levels since the 1940s.

Market conditions are such that now is a particularly good time for some renters to take the hint."

URL: http://www.forbes.com/2010/01/21/buying-versus-renting-lifestyle-real-estate-homes.html

Prices are down and interest rates are still pretty low, but it would be easier to take this stuff seriously if it weren't the *exact same thing* that has been said sine the beginning of the fall. It's always the perfect time to buy, it seems.

Happy Renter said...

Why would one of the most overvalued markets be a top ten market to go from renting to buying? That's just idiotic, anf Forbes pulls these lists out if its ass.

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Return, PREO!

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Manakin Sabot real estate listings said...

A situation of unprecedented modernity, millions of Americans are having so sad. Whether and how one of the greatest wonders in front of the Obama administration, because the housing policy to promote economic recovery.The difference between leaving the house to foreclosure because you have the money and the determination of loan defaulting to save money may be cloudy .

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Manila real estate said...

Cool Post. Prices would definitely goes up if people are walking away from their locations.

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gaurav said...

It'll be real interesting to see what prices do after the tax credit runs out in April. Especially if interest rates go up. doral real estate

Portland Allen said...

Really bad news, Hopefully the market will be better so that the homeowners will stay there.

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