The negative equity bubble is only one of the results of the
Housing bubble…bursting. Negative equity
is when someone owes more on their mortgage than the value of their property or
could sell their property for, also known as underwater. The “bubble” is the effect it has on the
Here is something interesting, many people who are
underwater on their mortgages, don’t want to sell their homes, according to the
Tribune. They would actually
prefer to wait until prices go up. By
keeping their homes off the market, they create a more competitive market.
Typically markets with very little backlog of
foreclosures, making prices come up because buyers have less options. Classic supply and demand principle, however,
there is one problem. This isn’t the
case for most markets and especially not in judicial states.
CoreLogic says that 22% of all homeowners in the US are
underwater on their mortgages. The unfortunate
statistics of homeowners that never recover their loan are, 70% of homeowners
over 30 days delinquent, 95% of homeowners over 60 days delinquent, and 99.2% of homeowners over 90 days
In Chicago alone, 36% of the market is underwater, 34% are
underwater by less than 20%, but 15% is underwater by twice the value of their
Most of these homeowners come to the realization that if
they want to avoid foreclosure, a short sale may be their way out. Thankfully for them, we have a 1 year
extension on that debt forgiveness.
Thank you, we'll be in touch!