We’ve heard mixed stories about the effect of being “underwater” on home equity. We’ve heard that owners are likely to walk away, leaving the keys and moving on, and we’ve heard that it makes little sense to bail out on even a deeply underwater mortgage. It seems the former view has taken widespread hold as “walkaways” spike.
While others persist in draining savings and running up credit card debt in a last-ditch bid to save their homes, a growing number see no point in making boom-level mortgage payments in a bust market — with no bottom in sight.
“People are hurting,” said Barnard, who includes himself in that group. “They’re scared or they’re angry,”
In California’s Inland Empire east of Los Angeles, where Barnard lives and sells real estate, median home values have plunged more than 40 percent in the last year as formerly sidelined buyers snapped up foreclosed properties.
Those bank-owned homes moved at fire-sale prices that decimated the value of neighboring homes — many of which are owned by people who have limited “skin in the game” because they put little or no money down at purchase.
The cascade effects of a few “abandons” in the neighborhood tend to set up a few more, and, contrary to the more optimistic gesticulations of some observers, this suggests that the housing crash is long from over.
Owners skulking away from “underwater” U.S. homes [Reuters]
the government created the moral hazard, we are getting what we deserve..
OBAMA TO THE RESCUE should really state OBAMA CREATES BIGGER MESS
Larry: No, slunk, I slunked out.
Leon: You mean you didn’t do shit, and you punked out?
Larry: Yeah I punked out.
shocking, I mean, who could have possibly seen this coming?
looks like bofa is now $172,000 further away from paying back that tarp money…
I like the way this “EP” guy writes.
This Barnard dope sounds like a speculator that leveraged his credit score into acquiring 5 properties with little money into the deal. In so doing, he helped bid up prices and prevented any potential buyers with more sound finances from owning the homes. If he defaults, his credit is trashed and the reckless banks who facilitated him take their loss. Sounds like a good outcome to me.
Duh!
What incentive would anyone have not to walk away from a jumbo loan? Even for people who put 20% down, most of that equity has probably been wiped out or will be within the next year. As this Administration supports rewarding lazy idiots and seems hellbent on punishing anyone who has worked hard, saved their money and played by the rules, only a chump would stay put and pay their mortgage.
Bottom of the housing market won’t occur until 2011 at the earliest.
Don’t forget the Option-ARMs that are going to recast.
8- agreed, the government is destroying personal accountability and blaming the boogeyman for the collective incompetencies of borrowers and lenders — the government needs to stay out of this mess and let people learn the hard way
i was watching kudlow the other night and they mentioned 97% of home loans are current; thats despite 4 years of falling prices — people pay despite the their homes value, who would have guessed?
now wait to see what happens once the bailouts and housing rescue works its way through the system— once you know the government will baby you if you f*ck up there will be no incentive left for anyone to pay… you think housing is bad now, wait 2 more years
EP is a girl, newbie…