My newest article for BiggerPockets is up. It's based on a new study from ATTOM Data Solutions that finds that US homeowners are four times more likely to be equity rich than underwater. The study defines those terms as follows,
An equity-rich home was defined as one in which “the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value.” On the other hand, seriously underwater properties were those “with a combined estimated balance of loans secured by the property at least 25% more than the property’s estimated market value.”
So what does this mean for real estate investors? My answer is as follows,
1. The small decrease in the percentage of homes that are equity-rich prior to the Coronavirus pandemic and the substantial number of houses that were still seriously underwater provide further evidence the US was already heading toward a recession and thus, that Covid-19 will only exacerbate the economic turmoil. So it would be wise to expect a fairly serious recession and not a 'V-shaped' recovery.
Of course, we are in the middle of a pandemic and recession of unknown size, so while opportunities still exist, real estate investors need to still be very careful and not overextend at a time like this.
Check the article out here.
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