J. D. Heyes
November 11, 2011
Owning your home used to be the “American Dream,” but these days, for an increasing number of homeowners, it’s more like theAmerican nightmare. That’s because since the Great Recession began in 2008,home foreclosures continue to climb while some 14 million Americans now find themselves with negative equity in their biggest investment.
According to real estate tracking firm Zillow.com,the number of homeowners posting negative equity rose from 26.8 percent just last quarter, to 28.6 percent now. That’s a rise of nearly 2 percent in just a few months. Worse, the bleeding isn’t expected to end anytime soon.
Part of the problem is the old economic axiom of supply and demand. There have beenso manyforeclosures and so many excess homes thrown into the market that the glut of homes combined with flat demand has begun to put downward pressure on all home prices and values, experts say.
And the issue isn’t going away anytime soon. Continued high unemployment combined with stagnant wage growth and higher prices for commodities like food, energy and gas have made it harder for people who still have mortgages to make their payments. One report said the number of mortgage holders who were 60 days late or more on their payments rose in the third quarter for the first time since the final quarter of 2009. The increase surprised analysts, many whom expected that figure to fall.
So widespread is the problem that all but 10 states and Washington, D.C., saw an increase in delinquency rates. There are some areas of improvement. The housing markets of the hardest hit regions of the country in Arizona, Nevada, Florida and California, for instance, are beginning to stabilize and even improve. But obviously the problem is only getting worse for scores of millions of Americans.
Some analysts believe it could be a generation or more before the housing market returns to its former economically formidable state. It is an industry that fuels and supports an incredible amount of jobs. The fact that the housing industry is still depressed – and at the same time the unemployment rate isn’t improving appreciably – is probably not a coincidence.
This article was posted: Friday, November 11, 2011 at 3:50 am