When you ask 29-year-old Anthony Walker about the home he owns, his response is a chorus of resigned sighs. It’s not quite the reaction you’d expect from one of the few in his generation who has managed to achieve homeowner status. But the property that Walker co-owns with a good friend and former roommate is deeply underwater. That means that since he purchased the property, the value has slipped so much that the house is worth less than total mortgage debt taken out to buy it. As time passes, he’s growing increasingly doubtful that he’ll ever see the property’s value back in the black.
It’s a predicament that more and more owners of less expensive starter properties are facing. Homes that were bought for a “reasonable” price at the top of the market are now floundering in negative equity, and according to Svenja Gudell, the director of economic research at the real-estate data firm Zillow, there’s a good chance that such properties will never be worth the mortgage debt owed on them. “In the lowest third of the housing market, not only are you more likely to be underwater, but homeowners tend to be very deeply underwater,” says Gudell. “It will take a really long time to lift some of those homeowners out of negative equity. And some of them will never reach positive equity.”
The Insta-Wife and I are big real-estate window-shoppers, and we’ve noticed that you get a lot more for the same money in a lot of places that we look at than you got a few years ago, despite claims of a recovery.