New Homebuyers Already Underwater

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As the United States housing market struggles to work towards recovery, a new recent piece of data is certainly setting off alarms. Reports indicate that more than one million new homeowners owe more on their mortgage loan than their actual home is worth. That frightening statistics leads many to fear that the housing market is still in a state of decline.

 

It is as if the United States learned nothing from the housing crash in 2007. Those that took out mortgages to buy a home in the past two years are already underwater. Economists are blaming the FHA for the issue, as they have been responsible for giving out loans with a minimal down payment. It is clear that a fairly substantial down payment should be required to ensure that the market does not continue its downward descent.

 

Over the last two years, many people opted to buy homes to take advantage of low rates and low prices. Analysts have been saying that the housing market will hit bottom and recover shortly over and over during those two years, but the residential real estate market continues to remain in its state of decline.

 

As home values continue to fall, many are now questioning as to whether or not the property market will, in fact, begin its recovery in 2013. More than a third of all housing loans have a balance that is greater than the value of their home. That number will likely continue in the next few months, particularly as the number of foreclosures hitting the market increases yet again.

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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