1 in 5 Homeowners Underwater on Mortgage

September 21, 2010

Twenty-one percent of US homeowners say they are “underwater,” or owe more on their mortgage than their home is worth, according to a new survey from the Pew Research Center.

Hispanics Most Likely to be Underwater
Although a small sample size (94 Hispanic homeowners surveyed) may skew results to some degree, Pew found that 41% of Hispanic homeowners owe more on their mortgage than their home is worth, compared to 35% of blacks and 18% of whites.


Lower-income, Unemployed Homeowners Have More Mortgage Problems
Not surprisingly, a higher percentage of unemployed homeowners (38%) than employed homeowners (20%) say they are underwater on their mortgage. In addition, percentage of homeowners with excess mortgage debt goes up as homeowner income bracket goes down.

For example, only 15% of homeowners with a family income of $75,000 or more are underwater, compared to 33% of homeowners with a family income of less than $30,000.

Westerners, 30-49-yr-olds Have Higher Excess Debt Rates
By region, the West has the highest rate of homeowners underwater (28%), closely followed by the South (23%). Lower rates are found in the Midwest (19%) and East (14%).

By age, 30-to-49-year-old homeowners have the highest incidence of excess mortgage debt (25%). The lowest rates are found among the oldest (65-plus, 15%) and youngest (18-29, 18%) homeowners.

4 in 10 Homeowners Think Walking Away OK At Least Sometimes
Nearly six in 10 (59%) homeowners believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender. However, two in 10 (19%) say it’s acceptable and an additional 17% say that it depends on the circumstances. The remaining 5% did not know or refused to answer.


Financial Circumstances Boost Acceptance of Walking Away
Nearly half (48%) of all homeowners say the value of their home declined during the recession, and as a group they are more likely than those whose home did not lose value to say it’s acceptable to renege on a mortgage (20% compared to 14%).


Renters are even more likely to say it’s okay to stop making house payments: Fully a quarter (25%) say it is acceptable to walk away.
Nearly one in four adults (24%) who say their families are just able to pay their monthly bills or can’t meet expenses say it’s okay to stop paying a mortgage, compared with 14% of those who say they “live comfortably.”

But homeowners who say their homes are worth less than what they owe are not more tolerant of the practice than those who would break even or make money on a sale (18% vs.17%).

Short-term Unemployment Hits Mortgages Hard
One-third of all long-term unemployed (33%) say they have had problems paying their rent or mortgage, identical to the proportion of those unemployed less than three months who experienced difficulty paying for housing, according to other recent data from Pew.

However, this proportion is more than double the share of Americans who have not been jobless at any point during the recession but who have had difficulty paying for housing during the recession (16%).

About the Data: Pew Research Center conducted a survey of 2,967 adults May 11-31, 2010.


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