Negative equity plague prolongs recovery
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Large numbers of underwater homeowners in California are hampering a widespread economic recovery, per Zillow. Now, in 10% of Southern California cities, one out of five homeowners with a mortgage owes double the value of their home.
This ratio varies by location, as nearly one in three homeowners with a mortgage in Los Angeles County and greater than one in two borrowers in the Inland Empire owe more on a home loan than their property is worth. Data indicates that cities furthest from major job centers are the most underwater, with over 60% of underwater loans being from areas in the high desert, such as Palmdale and Lancaster, as well as Inland Empire locations, including Hemet and San Bernardino.
Such high ratios of underwater homes originally led experts to predict that large numbers of homeowners would walk away from their homes in order to prevent paying more than properties are worth. This prediction has not yet been realized, however, as data shows that those borrowers with higher initial down payments on homes were less likely to abandon properties, even if they could not afford to sell their homes to pay off their mortgages.
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About The Author
Mary Balash
is a past member of the first tuesday Editorial Staff.
Don’t see housing market improving by 2018.
In 2014 Americans will be forced to purchase expensive health insurance under Obamacare or pay fines. The annual costs of forced health insurance will disqualify millions of Middle Class Americans from saving a 20% down payment or qualifying for home mortgage. Millions of current homeowners will not be able to pay both the annual costs of forced health insurance, or penalties for not purchasing health insurance, and their home mortgage. Home buyers qualified in 2012 to buy a home will be locked out in 2014. Beginning in 2014 home buyers to offset the costs of forced annual health insurance or penalties will have to make low-ball offers on houses. That will further hinder home prices moving upward.
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Rwolf
Liberals have long opposed the Individual Mandate, which was a Republican proposal going back to the 1990s. So, during the writing of ACA the IRS is (twice) forbidden from levying of property (money) for failure to carry health insurance. Nor may IRS pursue criminal charges. Without any enforcement mechanism the “fine” is essentially voluntary..
Most families and individuals won’t notice any difference whatsoever as, they already have insurance. The act gets 30-odd million uninsured Americans covered, leaving roughly 25 million still out in the cold.
Jobs will dictate the market in real estate, pure and simple. Yeah, excess inventory etc. etc. but demand fueled by a decrease in the unemployment rate will tell the tale.
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