Phoenix Underwater Mortgages Show Housing’s Threat to Recovery

[marmar]

(Bloomberg) Christine Johnson has reduced her spending on clothes, travel and home improvements -- all so she can stay current on the house she bought in Phoenix at the peak of the housing bubble.

Johnson, 44, a professional photographer, owes $330,000 on a ranch home that she says might fetch $270,000 in today’s market. She’s also about $70,000 underwater on a rental property. “I’m nervous now. How am I going to make enough money to pay everything on time?” the single mother said in an interview. “I used to be able to spend money on clothes. I don’t buy anything anymore.”

One year ago, there were signs that housing was healing; new home sales were up and prices rising. Now, new home sales are below levels hit at the depth of the recession two years ago, and 23 percent of all borrowers -- more than 11 million homeowners -- owe lenders more than their homes are worth. The renewed weakness is keeping a lid on consumer confidence, consumption and growth.

“It keeps the recovery from being all that strong,” says Mark Vitner, senior economist for Wells Fargo Securities in Charlotte, North Carolina. “We don’t see how the economy can get above 3 percent growth, except for a short period of time, with housing being so deeply underwater,” he said. ..............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-04-27/phoenix-underwater-mortgages-show-housing-s-threat-to-recovery.html

[aquart]

1. Duh.

They bailed out the banks instead of the homeowners.

[xchrom]

2. Recommend