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Upside-down homeowners on the rise
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Whether you call it underwater or upside-down or some other catchphrase, the reality is the same: ONE IN SIX HOMEOWNERS OWE MORE ON THEIR MORTGAGE THAN THEIR HOME IS WORTH.
Yes, that's the bad news. And while the news is worse for those homeowners who cannot make those mortgage payments, being upside-down does not always translate to a catastrophe. We owned a house for about 17 years and for at least 7 or 8 of those years, we were underwater. But, since we weren't intending to sell at that point and we were able to continue making our monthly payments, we just waited it out. (Sweated it out, more realistically.) Eventually, the market turned and we sold the house for a decent profit. But, more important, in my view, we lived all those years in a home we loved and we have happy memories of raising a family there. We would have spent a similar amount of money renting for all those years and never realized any equity at all.
Clearly, for families who must move and take a loss or who cannot make their mortgage payments, dropping home values are disastrous. But we also need to have some perspective on this: FIVE OUT OF SIX HOMEOWNERS OWE LESS ON THEIR MORTGAGE THAN THEIR HOME IS WORTH.
For a deeper analysis and the latest statistics on home values and mortgages, read this October 8 Wall Street Journal article.
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