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How is it possible that a third of US mortgages are under water?
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Anonymous
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How is that even possible? Is it that 33% of all mortgages currently outstanding were issued in 2005 or later? Do people really move or refinance that often? What gives?
We bought our house in 1999 and it's nowhere near underwater. Plus, even if the value had gone down, we put 20% down and pay extra principal each month. |
Anonymous
I think so - especially the refis, during that time. Remember everyone, EVERYONE, renovating their kitchen, adding onto the house, etc etc.? Some paid cash for that work but I think a lot did cash out refis and paid for it that way. Some probably took cash out and paid down credit card bills, went on vacation, etc. Everyone thought it was safe to do so because home values kept rising. |
Anonymous
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PP here - fyi I really liked this overview of housing prices during the boom. I thought it was a really good big picture explanation.
http://www.khanacademy.org/video/the-housing-price-conundrum?playlist=Credit%20Crisis |
Anonymous
| The refis are a huge part of it. There are lots of folks out there who are underwater even though their houses are worth 2 or 3 times what the purchase price was -- but because they did multiple cash-out refis, they have mortgages that are 3 or 4 times the purchase price. |
Anonymous
We put more than 20% down (close to 40% actually) and are teetering on the edge of being underwater. We'd probably be able to get just about what we owe, if we were to sell right now...and would have to bring our own money for things like realtors fees, any closing costs we agreed to, etc. We bought in the outer suburbs of VA in 2006--property values have just gone down that much. 
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Anonymous
| I'm in the same boat as 18:12. We put 20% down in 2005, and if we had to sell today, we would probably walk away even, possibly even with closing costs. |
Anonymous
| Also, this area of the country is not a good judge. For instance, my parents live in the Chicago suburbs. They bought a nice house in 1992 for $250,000. They have it on the market today for $280,000 and aren't sure they'll get it. They've put way more than $30,000 of improvements into that house. This is a great neighborhood, good schools, big house on a nice lot, etc. They've never refinanced or taken out much equity or gotten a second mortgage, so they're walking away fine, but it certainly wasn't a very beneficial investment. It would be really easy for them to be in a bad situation if they'd made one or two poor choices. I think that happened to plenty of people. |
Anonymous
| Might be 1/3 of mortgages, but many homes don't have a mortgage on them... |
Anonymous
| There are some parts of the country that really built up during the boom where a huge percentage of houses are underwater. I don't remember the exact percentage, but I've heard something in excess of 70% of houses in Las Vegas are underwater. |
Anonymous
| I bought place in 2006. Put 20% down and I'm still underwater by 1/3 of the mortgage amount. I'll never be above water on it. |
Anonymous
PP where did you buy? If it's in this area, I bet it will come back eventually |
Anonymous
House prices in Las Vegas have fallen by more than 60% since the peak, and are still dropping. The only people who aren't underwater in Vegas are the ones who bought a long, long time ago and didn't take cash out, or the people who have mortgages. |
Anonymous
That last sentence should end "...people who don't have mortgages." Apologies for the typo. |
Anonymous
Yeah, that pretty much explains it all. Not all of us bought before the boom. My houses: Arlington TH bought 2000 for 118k sold 2002 for 189k Arlington Duplex bought 2002 for 202.5k sold 2009 for 299k (-10k closing) Vienna SFH bought 2008 for 475k sold 2011 for 455k (to a builder though, didn't want to risk having a jerk buyer or running into other issues) |
Anonymous
| Did you buy all your houses for investment only, PP? |