Although home prices have been rising and the housing market is slowly improving, one sector of the market still faces an uphill climb. Approximately half of homeowners younger than 40 are underwater on their mortgages.
Nationally, about a quarter of homeowners still owe more on their mortgage than their home is worth, but the rise in home prices is moving many into positive equity. Younger homeowners remain more at risk because generally they haven't been in their homes as long, leaving them less time to build up equity, according to a report from an online real estate marketplace.
Still, the report puts a positive spin on the matter by stating that since younger, underwater homeowners are more reluctant to sell, it creates a tighter inventory of homes on the market, according to Stan Humphries, the site's chief economist. A smaller inventory of homes for sale leads to higher prices, which will further help the market recovery.
Two of the major metro areas hit hardest by the housing bust are recovering faster than other areas of the country, according to the report. Miami-Fort Lauderdale and Phoenix saw the largest declines in the number of homeowners who are underwater. Las Vegas is the city with the highest proportion of distressed borrowers. Almost 69 percent of homeowners were underwater in the second quarter.
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