US homeowners battling
10% UNDER WATER: MORTGAGES ARE HIGHER THAN THE VALUE OF HOUSES
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
INDEBTED. A home in Penn Estates, where most homeowners’ mortgages are under water, in East Stroudsburg, Pennsylvania, US.