From the Record:
About one in every seven New Jersey homeowners with mortgages, or 14.6 percent, are “seriously underwater” — owing much more on their mortgages than the home is worth, according to RealtyTrac, a California real-estate information company.
That’s down from 19 percent, or almost one in every five, in the second quarter of 2014. The drop in seriously underwater properties is the result of a rise in home prices, which is giving homeowners more equity.
Nationally, about 7.7 million homeowners, or 13.3 percent of those with mortgages, are seriously underwater, which RealtyTrac defines as owing at least 25 percent more than the property is worth. The percentage of seriously underwater homeowners has dropped from 17.2 in the second quarter of 2014.
Unsurprisingly, homes bought during the housing boom — when mortgage standards loosened and home prices soared — account for a large share of all those seriously underwater. Nationally, homes owned for seven to 11 years accounted for 38 percent of all seriously underwater properties, RealtyTrac said Wednesday.
Underwater mortgages affect the entire housing market, because people who owe more than their homes are worth can’t sell without taking a loss. That has led to a low inventory of homes for sale, slowing housing activity. In addition, underwater homeowners who struggle to pay their mortgages can’t simply solve their problems by selling the home.