US Housing Boom Saves Over One Million “Underwater” Homes | Local News
The pandemic housing boom lifted more than a million American homeowners out of a debt trap that many had been stuck in since the Great Financial Crisis more than a decade earlier.
The number of homes considered seriously underwater – which means loans guaranteed by the property are at least 25% above market value – fell to 2.25 million in the second quarter, from 3.5 million in the second quarter. end of 2019, according to the latest real estate equity report from real estate data company Attom.
Chicago, Philadelphia and New York were among the urban areas that saw the largest declines in the number of underwater homes.
The number of homes nationwide classified as “high equity,” meaning their value is at least double the outstanding loan balance, jumped 4.2 million during the same period. They now represent 34.4% of all mortgaged assets, up from 26.7% at the end of 2019.
“Instead of the virus pandemic hurting homeowners, it has helped create conditions that have inflated household balance sheets across the country,” said Todd Teta, chief product officer at Attom.
After the 2008 crash, borrowers across the country were left with assets that were worth far less than what they borrowed to buy it, resulting in a protracted foreclosure crisis in which millions of ‘Americans have been evicted from their homes.
During the pandemic, the government imposed a moratorium on foreclosures. The measure expired on July 31, but the rapid rise in house prices while in effect means that many distressed homeowners can now sell their property for a gain and avoid foreclosure. Nationwide median home prices rose 22% from a year earlier in the second quarter, according to Attom.
There are still pockets of the country where real estate debt traps are prevalent. The top metropolitan areas with the highest share of underwater mortgages include Baton Rouge (which tops the list at 12.7%) and New Orleans in Louisiana, and Toledo and Youngstown in Ohio.
On a more granular level, there are three zip codes in the Cleveland area where about half of all homes still have negative equity.