Zillow: Negative equity in the way of stronger housing market
Posted on Tuesday, August 26, 2014 at 8:57:35 AM
Buying and owning a home is a serious financial commitment, and many homeowners are currently tied down financially to their properties, preventing the housing market from growing as fast as it could be.
According to a recent report from Zillow, high negative equity rates are creating a sort of "gridlock" in the market, holding back rapid expansion. Generation X is the demographic with the highest rate, with 42.6 percent underwater, while millennials only owe more on their residential financing than their homes are worth 15.3 percent of the time.
"On the surface, the housing recession did not overtly impact millennials' housing wealth to the degree it did Generation X and the Baby Boomers, as most millennials were likely too young to have purchased a home during the bubble years," said Zillow chief economist Stan Humphries. "But as this huge generation begins to consider buying homes, they're entering a market still very much in recovery and far from anyone's definition of normal."
When it comes time to buy a house, there are steps that can reduce the odds of ending up underwater. According to CNN Money, all buyers need to improve their credit beforehand. Plus, it can also help to pick out a home that is at or below a budget, instead of aiming too high and getting into trouble.