US home­own­ers bat­tling

10% UN­DER WA­TER: MORT­GAGES ARE HIGHER THAN THE VALUE OF HOUSES

The Citizen (Gauteng) - - WORLD -

Five mil­lion still hit by fall­out of burst hous­ing bub­ble and fi­nan­cial cri­sis.

Bus driver Michael Payne was rent­ing a flat in a New York high-rise, where the land­lord fixed bro­ken win­dows with boards, so when he saw adverts for new houses in the Penn­syl­va­nia moun­tains for un­der $200 000, he saw an es­cape.

Payne and his wife took out a mort­gage on a $168 000 (R2.5 mil­lion), four-bed­room home in a gated com­mu­nity with swim­ming pools, ten­nis courts and a club­house. “I was go­ing for the Amer­i­can Dream,” Payne said. “We felt rich.”

To­day, the split-level house is worth less than half of what they paid for it 12 years ago at the peak of the hous­ing bub­ble. Lo­cated about 128km north­west of New York City in Mon­roe County, Penn­syl­va­nia, their home is in one of the sick­est real es­tate mar­kets in the US, ac­cord­ing to a Reuters anal­y­sis of data pro­vided by a lead­ing realty track­ing firm.

Over 25% of home­own­ers in Mon­roe County are deeply “un­der wa­ter,” mean­ing they owe more to lenders than their houses are worth. The world has moved on from the global fi­nan­cial cri­sis, but the Paynes and about 5.1 mil­lion other US home­own­ers are still liv­ing with the fall­out. As of June 30, nearly one in 10 Amer­i­can homes with mort­gages were “se­ri­ously” un­der wa­ter, ac­cord­ing to Irvine, Cal­i­for­nia-based At­tom Data So­lu­tions, mean­ing that their mar­ket val­ues were at least 25% lower than the bal­ance re­main­ing on their mort­gages. Lin­ger­ing pain from the crash is deep. But it has fallen dis­pro­por­tion­ately on com­muter towns and dis­tant ex­urbs in the east­ern half of the US, a Reuters anal­y­sis of county real es­tate data shows. Among the hard­est hit are bed­room com­mu­ni­ties in the Mid­west, mid-At­lantic and South­east re­gions, where in­come and job growth are weaker than the na­tional norm. A come­back has been harder this time, an­a­lysts say, be­cause the home-price runups were so ex­treme.

“The mar­kets that came roar­ing back are coastal,” said Mark Zandi, chief econ­o­mist at Moody’s An­a­lyt­ics. “In the mid­dle of the coun­try, you have more flat-lined economies. There’s no sup­ply con­straints. All of these things have weighed on prices.”

In ad­di­tion to ex­urbs, mil­i­tary com­mu­ni­ties showed high con­cen­tra­tions of un­der wa­ter homes, the Reuters anal­y­sis showed. Five of the Top 10 un­der wa­ter coun­ties have large pop­u­la­tions of ac­tive-duty sol­diers and veter­ans. – Reuters

In mid­dle of the US, economies are more flat­lined

Pic­ture: Reuters

IN­DEBTED. A home in Penn Es­tates, where most home­own­ers’ mort­gages are un­der wa­ter, in East Strouds­burg, Penn­syl­va­nia, US.

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