More mortgages are ‘seriously underwater’ across the US

(NewsNation) — About one in 37 homes is now worth far less than their mortgage balance, according to new data released Thursday.

Nationally, the share of “seriously underwater” mortgages – that is, homes with outstanding loans at least 25% above market value – increased from 2 .6% to 2.7% in the first quarter, according to real estate data company ATTOM.

However, this share remains well below the pre-pandemic level, when one in 15 households (6.6%) belonged to this category.

In a statement, Rob Barber, CEO of ATTOM, said homeowners continue to enjoy high net worth, but noted that “windfall profits are starting to erode little by little.”

The new report finds that several states, particularly in the South, have a significantly higher proportion of severely underwater homes than the rest of the country.

Louisiana leads the nation, where about one in nine mortgages (11.3%) is seriously underwater, according to the report. Meanwhile, Kentucky saw the largest quarterly increase, going from 6.3% to 8.3%.

If a homeowner pays too much and their property value declines, they can fall into negative equity and become “underwater” on their mortgage.

That’s less of a concern for longtime homeowners, who have seen their home equity skyrocket in recent years, but new homeowners haven’t been so lucky.

Last year, more than 10% of recent buyers owned properties that were worth less than they owed. Fierce competition for limited inventory and high mortgage rates have contributed.

When it comes to major metros with the most undervalued mortgages, Baton Rouge, Louisiana tops the list (13.4%), followed by New Orleans (7.3%); Jackson, Mississippi (6.5%); Little Rock, Arkansas (6%) and Syracuse, New York (5.6%).

The share of “equity-rich” homes, defined as properties with loan balances below 50% of market value, also declined in the first quarter, from 46.1% to 45.8%, according to The report.

The latest decline in stocks isn’t necessarily bad news for home buyers, as it may signal a broader decline in property prices.

“Amid recent trends, this year’s spring buying season will be of heightened importance in telling us whether a new long-term market trend is developing,” Barber said, while noting that it is Too early to say.

Last week, the average long-term mortgage rate hit a five-month high of 7.22%.

Americans were hoping for some relief in the form of interest rate cuts, but after several inflation reports, the Fed intends to keep rates high for longer.

Today, only 21% of people think it’s a good time to buy a home, which is the lowest level on record, according to Gallup.

Housing costs now rank second, behind inflation, as the most important financial problem facing American families.

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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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