Back when the housing bubble burst a few years ago, billions of dollars of home equity was lost by millions of homeowners throughout the country. Florida in particular saw home values plummet drastically, and there is still a long way to go before values return to pre-bubble figures – if they ever do. Nonetheless, there is a strong housing recovery taking place in South Florida, even if we are years from a return to relative stability. However, the local market is still dealing with the aftershocks of that bubble bursting, with many homes in South Florida still “underwater.”
As most of our readers probably know, a home is labeled as “underwater” when the homeowner owes more on the mortgage on the property than the home is worth. And, according to a recent report, there seems to be a correlation between the value of a home and whether or not it is underwater. The recent report indicates that of the homes on the lower end of the value spectrum, at a price-point less than $86,100, approximately 43 percent are underwater. That percentage gets lower as the value range of homes increases, with the top of the range – those homes valued at over $389,101 – seeing only about 10 percent underwater.
For someone who owns a home that is underwater, the lack of options can be frustrating. Americans used to enjoy a sense of mobility, the ability to move when they needed to in order to pursue a brighter future, be it a better job or simply because they found their dream home. Now, for those with underwater mortgages, the ability to quickly sell their current home so that they can move as needed has vanished.
Fortunately, some people in this position may be able to adjust their mortgage plan. Some homeowners have chosen to make mortgage payments on a bi-weekly plan, which builds equity in the home faster by reducing the principal balance on the mortgage quicker. A mortgage loan modification can be an option in a variety of circumstances, including when the prospect of foreclosure is looming after missed or delinquent payments. Everyone is dealing with the rocky housing market differently, but it is good to know that there are options.
Source: Sun Sentinel, “Zillow: Underwater mortgages hurt average homeowners the most,” Paul Owers, May 20, 2014