Indianapolis home mortgages stay afloat
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Fewer Indiana homeowners are underwater on their mortgages than this time last year.
Why it matters: While most U.S. homeowners are sitting on a mountain of home equity after years of rising house prices, in some pockets of the country an increasing share of folks owe more on their mortgage than their home is worth.
- This puts them in a horrendous financial situation if they need to sell their house.
Driving the news: The first quarter of 2024 ended with about 3.1% of mortgaged homes in Indiana "seriously underwater" — categorized as homes with an outstanding loan at least 25% more than the market value. That's down from 3.3% one year ago.
- In the Indianapolis metro, the share of underwater mortgages dropped from 2.8% last year to 2.6% this year.
- During that same period, median home values in Indy climbed 6.2% year-over-year to $244,160, per Redfin data.
The big picture: Indy is somewhat of an outlier, as the Midwest and South have the highest share of underwater mortgages, according to real estate data firm Attom.
- People who bought at the peak of the pandemic housing boom are seeing their home value dip below what they paid (or borrowed) for the house.
Reality check: These shares are still relatively small. After the housing crisis of 2008, 1 in 4 homes with mortgages were underwater.
- Unemployment was high in that recession and many people who couldn't pay back their loans by selling their house were forced into foreclosure or short sales.
- Right now unemployment in the U.S. is low — and the economy is strong.
Yes, but: If the labor market or economy takes a turn, underwater homeowners are more at risk.
- With today's high mortgage rates, the most financially secure people are buying in cash, Redfin chief economist Daryl Fairweather says.
- Recent buyers who took out a mortgage likely have less cash to fall back on.
What's next: "This year's spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing," according to Attom CEO Rob Barber.
- The best time to sell your house in Indy is almost here. Indianapolis homes listed for sale in early July could make $8,100 more, according to Zillow.