Homes: Underwater and Sinking Fast

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


Although a few glimmers of hope for the housing market have shown through as of late, several new reports concerning houses with “underwater” mortgages—when a homeowner owes more than the total value of his or her home—foresee bleak times that could undermine a full economic recovery.

Moody’s Economy.com found that 24 percent of all US homes are currently underwater, a 15 percent jump from a year ago, while 8 percent of homes have debt equal to the home’s value. Online real estate site Zillow similarly calculated in its own report that 23 percent of homes were underwater. A Moody’s analyst told The Washington Independent that her firm’s findings mean about 16 million homes are underwater, adding that “Home prices have increased in the last month or two but I think it’s too early to call an end to the downturn.” More ominous, though, is a recent projection by Deutsche Bank that a whopping 48 percent of all US home mortgages will be underwater or “upside-down” by early 2011.

The fear with these kinds of statistics is that they’ll stunt a more vigorous economic rebound here in the US. The housing market—as the Great Housing Meltdown so painfully illustrated—is inextricably linked to broader economic health, and if staggering totals of underwater mortgages continue to pile up, that will seriously blunt recovery efforts to turn the economy around, like stimulus spending. It also doesn’t help that the goverment’s mortgage relief efforts—like the largely flawed Home Affordable Modification Program—have done little so far, as the recent Hope Now statistics show.

Yet apart from these relief programs, experts admit that the only way to deal with underwater mortgages is to sit back and wait—which doesn’t bode well for a V-shaped recovery anytime soon. (Think more of a W.) “For the most part, we have to let it happen. We needed a correction,” Deutsche Bank’s Karen Weaver told The Washington Independent. “And, as we let the crisis play out, shore up the rest of the economy with low rates and government stimulus.”

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate