U.S. Economy

It’s 2006 Again: 4.5 million homes are under water on mortgages

May 30, 2018 By Andrew Moran Leave a Comment

It’s 2006 all over again. It’s time to spend your evenings on MySpace, grab your iPod Nano, and sport multicolored wrist bands. Oh, and get ready for another housing crash because millions of homes are still under water.

According to Zillow, a real estate data firm, roughly 4.5 million homes, or 9.1 percent, owed more than their homes are worth in the fourth quarter of 2017. It is also estimated that more than 700,000 households owe at least double as much as what their properties are worth.

Aaron Terrazas, a senior economist at Zillow, warns that families with stagnant property values are “trapped” and can only “wait” to get some equity. This could very well impact local economies, such as Baltimore, Chicago, Washington, St. Louis, and Philadelphia.

The same group reported last week that existing home sales have been essentially flat for nearly two years. With historically low interest rates, real estate developers took advantage and started constructing new properties.

This is bad news for the national economy, especially when interest rates start to climb. And the trends could spell doom for the next administration.

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