Checking The Pulse Of The Kansas City Real Estate Market

The site with figures more questionable than Enron (starts with a Z and ends with a W) estimates that 1/5th of U.S. homeowners are upside down on their homes. If you believe these stats then that tells us that 80% of us are happier than a fat tick on skinny dog! OK, maybe  it isn’t telling us THAT but – at the very least – it indicates 80% of homeowners won’t be walking away from their homes and mortgage payments any time soon. So what about the other 20%? Well, contrary to popular belief, many of the upside down 20% won’t be walking away from their homes either. There’s a school of thought that homeowners will walk away from their responsibilities at the drop of a dime, putting holes in the walls on their way out. Yes that DOES happen sometimes but it’s not the typical outcome for pressured homeowners.

It’s well-known that many buyers who purchased homes since 2005 are now upside down. Heck, some who purchased homes 10 years ago or 10 months ago are upside down. But the majority of homeowners and home buyers today go forward under the assumption that real estate prices will rebound – sooner or later. Furthermore, not nearly enough consideration is given to the pride of homeownership and to the other measurable and immeasurable benefits derived from owning a home.  Some will scream that renting is the way to go but I don’t personally know anyone who would prefer to live in apartment – or even rent a home – to owning a home of their own. I’ve also seen enough  in recent years to know that most homeowners will do whatever it takes to stay in their homes — it’s that important to them.

Even homeowner’s who believe it’s time to get out have options other than foreclosure. Some will work out a Short Sale with their lender while others will sell their home at a loss to save their credit and live to buy another day.  So if 80% of homeowners are not upside down and a large portion of the 20% who are upside down will not simply walk away, is there concern elsewhere? The answer is yes and it’s in the large number of  homeowners who are already 90+ days behind on their mortgage payments and in the large number of adjustable mortgage interest rates that are scheduled to reset in the next six months or so.  Many won’t be able to overcome being months behind on their payments and others won’t be able to make a several hundred dollar higher mortgage payment. I also have concerns about further job losses, pay cuts, shorter work weeks and higher credit card interest rates, among other things. Any of these factors could push an upside down homeowner – or a right side up homeowner for that matter – out of their home.

Posted by Jason A. Brown