Homes: Underwater and Sinking Fast

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


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.”

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

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