Homeowners In These Regions Of The U.S. Are Facing Severe Economic Headwinds

For generations, Americans were taught that buying a home was among the best financial decisions they could make. Residential real estate gave people a place to live while generally increasing in value, setting families up for economic stability for years to come.

And while that is still true to some extent in many communities across the country, those living in other areas are less likely to find such an advantageous result under current market conditions.

Drowning in debt

There’s a term for people who owe more on their homes than the property is worth: underwater. This group of homeowners has grown larger in recent years amid rising interest rates and falling home values.

Nowhere is this more obvious, according to experts, than in the South and Midwest. A new study found that a disproportionate number of underwater mortgage holders live in these regions.

At the top of the list is Louisiana, where more than 11% of mortgages are underwater. That’s about one point higher than last year, with the increase due in large part to the 6% decline in home values statewide over the past two years.

Wyoming comes in second with nearly 9% of mortgage holders underwater — and home prices have plummeted even more drastically in that state, falling a whopping 12% in only a year.

A blip or a trend

As for how concerned homeowners in this swath of the country should feel, that probably depends on whom you ask.

Lawrence Yun, the chief economist for the National Association of Realtors, took a cautiously optimistic approach, advising: “It could be a temporary increase and not necessarily a major concern.”

But if things get worse, i.e. rising unemployment and/or a recession, those who are underwater in their mortgages could be hurt worse than the general population.

Chris Agee June 12th, 2024

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