Dallas, May 6: Could this be categorized as a case of the mustaches being longer than the beard? A new study has revealed that close to one-fifth of Dallas-Fort Worth area homeowners owe more on a mortgage than their homes are worth, providing food for thought for the Obama administration.
Falling prices: The culprit
According to the Real-estate Web site, Zillow.com, close to 17 percent residents of this area were the so called "underwater" borrowers. The reason for such a state of affairs can be attributed to the falling housing prices. Such a southward movement in the prices makes virtually impossible for homeowners to refinance or sell their homes. The others cannot take advantage of lower interest rates in such a scenario.
Talking of the situation in the housing sector, Stan Humphries, vice-president of data and analytics at Zillow.com said, “What's going on here is that you don't have any markets that have turned around and you have new markets, like Dallas, that have joined the ranks of communities where home prices have fallen.”
Dallas better off
Data, as revealed by Zillow.com, suggested that 20.4 million borrowers were underwater at the end of the first quarter of the year as against 16.3 million at the end of the fourth quarter last year. The data suggested that even at 20 percent of borrowers being underwater; Dallas fared much better than the national average of almost 30 percent. In Las Vegas, close to 70 percent of homes were stated to be underwater.
“It looks like you have had four quarters in a row of year-over-year declines and they are each increasing,” Humphries said. “Dallas is looking better than a whole lot of places, but it’s not looking as good as it has in the past.”
“Dallas' peak was a full year after the national peak, and its current decline is pretty mild,” he added.
The number of house owners underwater may appear to be on the higher side given the conservative methodology followed by Zillow. The company does not adjust for any payments made toward the outstanding mortgage balance and does not take account of foreclosures in its pricing models.