Every day, the economic research reinforces that message.
Today, on a conference call with investment strategists from a leading U.S. private bank, we again heard evidence that the housing recovery is being bogged down by consumers who want to move but can’t.
Some can’t qualify for a mortgage given today’s tight underwriting standards.
Others can’t scrape together the hefty down payment and other costs required.
Others are held captive in their current homes, due to negative equity (a fancy term meaning they owe more than their house is worth).
And, of course, how many times have we been reminded that many younger Millennials (those in their twenties or early thirties) are shut out of the housing market by high student debt?
Take a look at an interesting Zillow chart by following this link. It shows, by state and zip code, which areas are most affected by underwater home values.
Needless to say, Florida, California, Nevada and a few other states are still bearing the brunt of the housing downturn (you can see from the map that almost the entire state of Florida is colored in red, evidencing a high percentage of underwater homes).
In Palm Beach county, where our office is located, almost 25% of owners owe more than their home is worth. In other counties, that percentage is way over 40%.
Just by observing what is going on with clients and in our own neighborhood, we understand that the situation is dramatically better than it was in 2008 or 2009. But we would have to agree with Zillow’s conclusion:
“Despite the improvements, one in five American homeowners with a mortgage remains underwater, a stubbornly high rate that is contributing to inventory shortages and holding back a full market recovery.”