Is the Housing Market Taking on Water?

Are We in Crisis Mode?

We’ve been seeing articles of late about the rising numbers of “underwater” mortgages (owing more on your mortgage than the market says it’s worth).  But unlike the housing bubble (and subsequent pop) of the 2000’s, the percentage of these types of homeowners is concentrated in specific areas.  Under 8% of homeowners nationwide are affected and mostly in the pandemic hotspots like Cape Coral, Florida and Austin, Texas where remote work and the desire for larger spaces and warmer weather catapulted rents and housing prices.  These affordable areas saw the biggest home value surges in 2020-22.

And while we are seeing many Sellers attempting to avoid deeper declines in their equity by listing their homes for sale now (hence the high inventories in some of these metros), a housing crash is not likely.  Today’s homeowners are a different breed from the 2000’s, mainly because of the Great Recession in 2008.  Lending laws got a lot tighter and, as a result, homeowners are overall more creditworthy than they were in the 2000’s.  While the trend is still a concern, we are in a different economy than we were in 2008 – unemployment levels remain low and wages are still climbing in some industries.  Economists report homeowners nationwide still hold trillions in equity and see little chance of these localized housing issues spreading.

Click Here for Realtor.com’s recap and what to do if you have to sell now and you are in a negative equity situation.