Magazine article Newsweek

Two Numbers: Breathing under Water

Magazine article Newsweek

Two Numbers: Breathing under Water

Article excerpt

Byline: Anna Bernasek

The housing market exited the trauma ward in 2013. Prices rose as much as 30 percent in some areas, bidding wars broke out and the foreclosure rate halved from its peak. But the patient is by no means fully recovered. In fact, five years after the housing bubble collapsed, a staggering one in five mortgage holders still owe more than their home is worth.

At its worst in early 2012, almost 16 million Americans were under water on their mortgage. In some of the hardest hit neighborhoods, such as Las Vegas, Phoenix, and Detroit, 70 percent of homeowners owed more than the value of their home. Since then, rising home prices have pushed 5 million homeowners back into the black, but 11 million out of a total of 50 million mortgage holders remain in what financial folks call a negative equity position. "This is the new normal in the housing market," said Svenja Gudell, director of economic research at Zillow, an online real estate database, "We will have high levels of negative equity for some time. …

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