Remember the Great Recession of 2007-2009? Of course you do. It was a once in a lifetime event. Right? Now, here we are in March 2020 and the stock market is crashing and the world is reeled by a Pandemic.
The Great Recession left 3.6 million American homeowners with negative equity. They owed more than the value of their home. Things improved after that. The economy got better, jobs came back, the real estate market recovered. In 2016 that number improved to 2.8 million houses underwater. Still a big number.
Here is Austin our real estate market has been booming now for many years. Now a Pandemic and Stock Market Crash, and rising unemployment is disrupting the real estate market. Some homeowners are already underwater.
What’s going to be the outcome of the current stock market crash, spiking unemployment, and loss of jobs and entire businesses? It’s too early to tell, but I think it’s going to be ugly.
Perhaps this coronavirus will be short lived. Perhaps the current recession will be more V shaped or U shaped. Perhaps jobs will come back quickly and the real estate market too. Perhaps.
What if that doesn’t happen? What happens to homeowners who are underwater with their mortgage balance?
If unemployment reaches 20% like some are projecting, once again millions of home owners are going to see house values drop to the the point that they owe more than their home is worth. If circumstances make them unable to pay their mortgage payments they may need to sell to avoid foreclosure. This is where a short sale might help.
A short sale is when the lender is willing to accept less than the unpaid mortgage amount. Underwater homeowners need to know about this option to avoid foreclosure.
This site will help you understand more about short sales and if it’s right for you.
Stay tuned. More content is coming every week.
