Posted on 12/09/2022 4:38:12 PM PST by george76
About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth...
Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022...
That's about 1 in 12 homes purchased in 2022 with a mortgage, or 8%. Nearly 40% of homes bought this year have less than 10% of equity left to tap.
The figures reflect yet another fallout from rapidly rising mortgage rates this year, which have put pressure on housing values as home price growth cools at a record pace month over month.
...
Lower-income households hurt the most.
...
Those with FHA loans faced the largest equity challenges, Black Knight found, with more than 25% of folks with FHA loans falling underwater. Additionally, some 80% had less than a 10% equity stake in their homes.
...
Recent buyers at greater risk..
Most of the folks at risk of having their loans slip underwater were those who purchased when home prices were at their highest, Black Knight found. At least 10% of June purchase originations – when home prices peaked at $438,000 – were underwater, with more than 30% having less than 10% equity.
Although home prices have cooled for the last seven months, with prices now 3.2% down from June’s high, the pricing adjustment hasn’t been enough to ease homebuyers' affordability concerns.
“In a world of interest rates 6.5% and higher, affordability remains perilously close to a 35-year low
(Excerpt) Read more at money.yahoo.com ...
Under water mortgages are a big opportunity for those holding cash.
“Under water mortgages are a big opportunity for those holding cash.”
well maybe.
I have not seen any articles about helocs so far, I may have to do one.
all heloc interest is variable and many have had the min monthly payments double in the last 6 months
Oooopsie
Who buys in a sellers market? I guess they will be getting a bail out soon from those of us who were not stupid enough to do the same. These are millennials… they are always right, just ask them ;) But no fear, they will receive a bail out within the next ten years.
Well, I guess those Global Climate Change predictions did come true after all.
From first time homebuyers thinking they immediately need a house as big or bigger than mommy and daddy's, investors that ramped up home prices by purchasing 30% of listings in most major cities, people that have no sense of value and live off of other peoole's money and realtors who don't understand the basics of the RE market beyond their commission check, there's more than enough greed to fuel the soon-to-be pyre.
The voting Dem addiction. Don’t let friends get hooked on it.
I always thought you bought a house to live in it.
My place is worth over a million dollars and I’d be happy if it was suddenly only worth 100,000 dollars.
Property taxes would go down to 50 dollars.
I’m in rural Hawaii so no inner city problems.
Nothing like buying high and selling low for property purchases.
But they weren’t buying mere “houses”. They were buying “homes”, or at least that’s what the Realtor told them.
george76, allow me to educate you.
Yahoo is a communist site.
Yahoo pays lying communist scribblers one-quarter of a penny for every click they get on their lying articles.
Everytime you click on Yahoo, you are paying the rent, the food and the drugs these commies live on.
Quite simply, starve a commie by not posting a Yahoo article.
Underwater doesn’t mean default. As long as they can make the mortgage payment, and intend to stay in the home, the market value of it doesn’t matter.
“In a world of interest rates 6.5% and higher, affordability remains perilously close to a 35-year low
1920-34 near 6% mortgage average1
1935-45 just under 4.5% mortgage average1
1960 - 5.1% mortgage average2
1971 - 7.3% mortgage average1
1980 - 13.7% mortgage average2
1981 - 16.6% to 18.45% mortgage average2
1990 - 10.1% mortgage average2
2000 - 8.1% mortgage average2
2010 - 4.7% mortgage average2
2020 - 3.1% mortgage average2
sources:
1Mortgage Rate History: Check Out These Charts from the Early 1900s
2Here's how much home prices have risen since 1950
I would advise those who purchased, and are now seeing a drop in price, to hang on and keep making payments. Take every opportunity to reduce spending and increase income. Even small amounts count.
In the longer term, these buyers might look back and see that they did well. With rampant inflation, the paper value of the purchase is likely to hold up, ten years hence. And they have the benefit of living in their own home.
Not to mention free calories all over the place..:
I’m predicting doom next year…globally.
This is ‘bad financial news’?? A nationwide problem they seem to infer.
This was true - and then some!! - in Houston Texas in about 1982-1983. I was one of them. And some of my friends.
It’s all relative …………
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"Homes." LOL.
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