270,000 homebuyers who bought in 2022 are underwater on their mortgage

[ismartganesh]

About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found.

Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022, Black Knight found. That's about 1 in 12 homes purchased in 2022 with a mortgage, or 8%. Nearly 40% of homes bought this year have less than 10% of equity left to tap.

Recent buyers at greater risk

Most of the folks at risk of having their loans slip underwater were those who purchased when home prices were at their highest, Black Knight found. At least 10% of June purchase originations – when home prices peaked at $438,000 – were underwater, with more than 30% having less than 10% equity.

Although home prices have cooled for the last seven months, with prices now 3.2% down from June’s high, the pricing adjustment hasn’t been enough to ease homebuyers' affordability concerns.

“In a world of interest rates 6.5% and higher, affordability remains perilously close to a 35-year low,” Graboske said. “Risk among earlier purchases is essentially nonexistent given the large equity cushions these mortgage holders are sitting on. More recent homebuyers don’t fare as well.”

[yemdoing]

It’s a loss only if they sell . For primary residence it’s ok . 
 

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