Underwater Mortgages?

[Airstream]

Unfortunately I do not have the link, and if I did I couldn’t post it and have you read it. But about a week ago I read an article in the WSJ that stated a bit over 15% of all homeowners that have mortgages that bought after 2022, are now underwater on their mortgages. And about 7 to 8% of those between 2020 and 2022 are now underwater. The other point not talked about is if that is true think about the amount of equity that has now been lost. And the next scary thing I read is that the growth in inventory is at a rate never seen in history. Now I am sure this isn’t true in all localities, but I recently did an appraisal in an area where I have worked for about 12 years. I don’t go back there often now due to distance, but I was asked to do some work, and when I did an analysis of inventory there was a 6.8 month supply on the market. I have not seen those kinds of numbers for a very long time. I also talked to my brother who said that there is a homeowner in his development whose house has been on the market (he lives in Bend Oregon) for months with no offers.

What have you all been seeing in your markets? I’m sure it varies. For example in the area where I know live it is about a 1.5 month supply. So still very strong, because the area has been growing and new housing has been steady. But what is all of your sense out there? If rates don’t come down soon, could we see a housing crash and a rash of REO’s and short sales? Maybe not like the previous mortgage crash. That may never happen again. But it still could be significant. Are you coming across any short selling yet?

 

[cpursley]

Following.

 

[J Grant]

Not seeing short sales but seeing a lot more concessions on purchase orders. Prices have softened to a more reasonable level but are still "high" compared to ...when they were actually affordable for normal people. Air Bnb, investors, all cash buyers and LLC now make up more than 40% of all purchase orders and have driven prices up. Inventory here is still selling if well priced or remodeled or special - the day of bidding wars and 1 DOM are over for the most part.

 

[CGinMN]

Foreclosures and prices coming down would be a good thing. It’s not happening in MN. Some areas of TX and FL you have people underwater because prices have gone down compared to 2022, but they’re not that far underwater.

 

[Joe Flacco]

I am working on one in a neighborhood and segment that is approaching 6 months of supply.

If I look at the median it is down about 10-15% from 2021-2022. But if I compare 2025 sales to prior sales between 2020-2023 prices are pretty stable since 2021.

 

[Hondo]

I have done more VA liquidation appraisals this spring than I have done in the past 2 - 3 years.

 

[Sid Holderly]

Average and median prices are still increasing, not as fast, available homes are still very low but increasing, average and median DOM still low, concesions increasing, over list offers are gone.
Depends largely on which segment of the market all driven by short supply.

 

[Terrel L. Shields]

NW Arkansas is blazing hot market. Has been for 10 plus years. You have to have a major over-priced place to not sell rather quickly.