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Oct 8, 2008 7:05 pm US/Eastern
Suburban Housing Market Taking A Beating
Experts: Eventually Things Will Return To Normal And Those In Northern Counties Will Get Their Value Back
NEW YORK (CBS) ―
The bursting of the nationwide housing bubble has left a record number of homeowners "under water." They owe more on their mortgage than their house is worth.
As home prices soften, many owners -- especially recent buyers -- find themselves in a tough spot.
"I bought my house for $315,000, but it was worth 350 at the time. Now it's worth $300,000, so I guess I'm under water," Orange County resident Michelle Miranda-Munoz said.
And she's got lots of company. A new study estimates more than 12 million households owe more on their mortgage than their homes are worth. That means a record 16 percent of households are "under water."
Keep in mind that's a nationwide number. In the northern suburbs, the percentage of homes "under water" is probably much lower. That's because home prices here are down just 5 to 10 percent off their 2006 highs.
In Putnam County the median sales price has actually gone up.
But economist George Roniger said the nationwide "under water" numbers should worry all of us.
"When homeowners are out of equity and owe more than their place is worth people can't refinance their homes and get extra equity out of their homes, make additional purchases," Roniger said. "It means a lot of people are frightened."
But real estate pro Nick Wolff said unless they're desperate to sell, "under water" homeowners shouldn't worry too much.
"Homes have been the best investment," said Wolff. "Live in it, in 10 years you'll double your money, no matter where you are in Westchester. The market will come back and they'll be okay."
That's what Miranda-Munoz is counting on.
"We're gonna be in our house a long time," she said. "I'm not worried."
Patience is a virtue. It often takes four years or more for a down-housing market to return to pre-slump levels.
Many homeowners are also seeing their home equity lines of credit cut off, as lenders reassess how much their houses are worth.
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