All the numbers look good for housing right? New home sales soared 24 percent in the first five months of the year from the same period of 2014, and existing home sales hit a 5 ½-year high last month.
But it's not working out so well for those of us who aren't wealthy,
The Wall Street Journal reports.
About 15 percent of homeowners whose houses are worth less than $200,000 were underwater March 31, according to real estate research firm CoreLogic. That compares to just 6 percent for homes worth more than $200,000. Underwater means a home's value is less than the amount of its mortgage.
The low wage increases that have prevailed since the Great Recession ended in June 2009 — 2.2 percent a year on average — have made it
difficult for non-wealthy buyers to qualify for a mortgage. And home-price drops in lower-income neighborhoods have forced foreclosures.
"Without [government] help, these neighborhoods might take years and years to come back," Julia Gordon, a senior director at the left-leaning Center for American Progress, told The Journal.
Many aspiring homeowners among the working class have to content themselves with renting. The U.S.
homeownership rate has dropped to 63.7 percent from a peak of 69 percent in 2004.
"It’s more of a new normal," Nobel laureate economist Robert Shiller of Yale University told The New York Times. "We went through a wrenching experience with the biggest housing bubble and the biggest collapse since 1890. This is an anxious time." The bubble inflated from 2001 to 2006.
Another concern, writes The Journal's Joe Wright: "many low-down-payment borrowers — including first-time home buyers — are returning to the market, boosting housing but raising concern among skeptics who worry about the risk of such mortgages."
In the first quarter, 51 percent of home buyers with a non-jumbo mortgage forked over a down payment of 10 percent or less on a home, compared with 48 percent a year earlier, according to RealtyTrac.
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