Is Mortgage Debt out of Control?

//Is Mortgage Debt out of Control?

Is Mortgage Debt out of Control?

Is Mortgage Debt out of Control? | Simplifying The Market

The housing crisis of the last decade was partially caused by unhealthy levels of mortgage debt. Homeowners were using their homes as ATMs by refinancing and swapping their equity for cash.

When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home). As a result, they walked away. This caused prices to fall even further.

Headlines are again talking about record levels of mortgage debt, making the comparison to the challenges that preceded the housing crash. However, cumulative debt is not an important data point. If we look at the debt as a percentage of disposable personal income, we are at an all-time low.

Here’s a visual representation of mortgage debt as a percent of income:Is Mortgage Debt out of Control? | Simplifying The MarketFurthermore, according to a new report from ATTOM Data Solutions, more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains:

“[O]ver 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.”

Bottom Line

Unlike 2008, homeowners have a comfortable level of mortgage debt and are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften.

By | 2019-07-03T03:00:48-07:00 July 3rd, 2019|blog|Comments Off on Is Mortgage Debt out of Control?

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Jeff and Jane Daley started their careers in real estate after taking early retirement from the corporate world. They enjoy partnering with clients to meet their goals in real estate. Their success in getting it done right for their clients is their belief in education. University and formal real estate courses have been imperative in staying up to date for the benefit of their clients and their business. The Daley's started in real estate in 1999 and have helped hundreds of clients buy or sell their homes successfully. Their fiduciary responsibility to their clients is always a top priority. MILITARY SERVICE: Jeff is a U.S. Army combat veteran and served with distinction in Vietnam. Jeff and Jane Daley located their business in Scottsdale, Arizona. Their team also serves the adjacent communities of Carefree, Cave Creek, Chandler, Glendale, Mesa, Paradise Valley, Phoenix. Jeff is also available as a media resource for interviews and/or articles.
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