In the first quarter in 2014, only 11% of the mortgaged homes were upside down. So that means that 1 out of every 9 mortgaged home owner owes more on their mortgage than the value of their home. At the end of the 4th Q in 2013, the percentage of underwater homes were 12.6% compared to the 1st quarter in 2013 which was 21.3%
The majority of the underwater homes are located in the inland areas. These owners are not able to contribute to the economy since an excessive portion of their income goes into debt repayment and above market interest rates. These owners are making mortgage payments greater than the price of what that same home would rent for.
The future forecasts prices slipping back down, so expect to see a rise in the number of underwater homes plunge back down again. According to Core Logic, don’t expect of a full recovery until 2020.
Notice of Defaults “NOD’s” are still high. A notice of default happens when a home owner misses 3 or more mortgage payments. Statistics reveal as of Q1 2014, 38% of NOD recorded go onto foreclosure, as the rest are short sales or Loan Mods.
How long will it take for most homeowners to be solvent again? Home owners who stick it out in their homes, seeing positive equity may take between 10-15 years to see the light of day. It all depends on when they bought their home. For those who purchased at the height of the boom, it may take to 2020 for homeowners to see the beginning of positive equity.
Some people were not able to wait it out to see the light of day. I am a Short Sale Realtor who specializes helping people get out from the burden of a house payment that is killing them. The stress is just not worth it any more. Most just give up after using all their savings and going into more debt thus making things even worse. These people always paid their bills on-time and would never dream about defaulting on their mortgage. It is a devastating decision to stop paying or to receive that first Notice of Default. I see it happen with Doctors, Professionals, Pastors… they are not alone.
Read my related article LIFE AFTER A SHORT SALE
Kathy Dyer Realtor CABRE #01723710
KW Coastal Estates
Carmel Ca. 93923