– 44% of Homeowners With a Mortgage Can’t Sell: Zillow (TheStreet, May 24, 2013):
NEW YORK (TheStreet) — About 44% of homeowners with mortgages cannot afford to sell their homes, according to a recent blog post from real estate company Zillow.
Despite a recovery in prices, over a quarter of homeowners with mortgage loans still owe more than their homes are worth. “But another 18.2 percent of homeowners with mortgages, while not technically underwater, likely do not have enough equity to afford to move,” according to the blog post.
43.6% of homeowners have less than 20% equity in their homes. That makes it hard for them to move or trade-up, given the considerable costs involved in buying and selling a home, including the cost of a down payment for the next mortgage.
This inability to sell is one of the big factors behind the acute shortage of existing homes for resale in the country. Strong investor demand for foreclosed homes is another reason.
Previously, foreclosures provided an overwhelming supply of homes that dragged down the market. Now investors are snapping up distressed properties at a rapid pace and converting them into rentals. The share of distressed sales — foreclosures and short sales — is now only 33% of all sales, compared to 44% recorded a year ago, according to a survey from Campbell/Inside Mortgage Finance.The inventory of existing homes for sale represents 5.2 months of supply, up from 4.7 in March, but still below the 6-month mark that is considered a good balance.
Still, the shortage of inventory is contributing to a rise in home prices, which creates an interesting feedback loop.
As home prices rise, more and more homeowners are pulled from underwater. The national negative equity rate dropped to 25.4% of homeowners with a mortgage in the first quarter of 2013, down from 27.5% in the fourth quarter of 2012 and 31.4% a year earlier.
During the first quarter, 730,000 homeowners were “freed from negative equity.”In regions particularly hard hit by the housing bust, including California, Florida, Arizona and Nevada, “there has been a negative equity feedback loop, as regions with high negative equity have experienced acute inventory shortages brought on in part by locked-in underwater homeowners, and these shortages in turn have produced home value appreciation spikes, which have been reducing negative equity at a fast pace,” according to Zillow.
Yes, it is truly impacting our once great social mobility. One of the things that makes a nation strong is social mobility; the ability to move from one place to another in comfort. In 1869, the Transcontinental Railroad was completed, one of the greatest accomplishments of our young republic. People were able to move, settle in new places and find opportunities to enrich themselves.
Without social mobility, the growth margin drops dramatically.
When I graduated from college, it was easy to get a job and I went into a field that helped many other people get jobs, build their own companies, and build new things. It was a great time in America.
Then, came NAFTA and that Clinton fellow. I was one of the coordinators to put Ross Perot on the CA ballot, I did not want a Clinton or Bush. Even when he dropped out of the race, he still got 22% of the vote.
Next thing I see, Clinton was president…..what a friggin nightmare. NAFTA, give away trade agreements……and bush continued it when he took power in the coup of 2000. Look at any trade agreement, you will be horrified at the good jobs that continue to go offshore, and our government pays corporations to do it.
So, now we have a stinkhole of a country. Loss of social mobility pretty well guarantees we will not be coming back soon.
I saw on Huffington Post this morning that every bridge in America is in poor shape. Why can’t we fix them? Last year, the city of Oakland gave China the contract to build the new Oakland-Bay Bridge. It is already having problems. Why couldn’t our own engineers build it?
For every good job created, seven more come of it.
We need new political parties and decent candidates. The status quo is bankrupting us.
What I forgot to mention is that without jobs, without growth, people cannot sell their homes or hope to buy new ones. We are caught in a stagnant web of corruption.