Homeowners are sitting on a negative equity timebomb after losing $108.4 billion on their property values this year, experts say.
The average borrower saw their home equity plummet by $5,400 in the first quarter of 2023 compared to last year – with households in Washington, California and Utah worst affected.
And if prices tumble by 5 percent more than 200,000 households could be at risk of falling into negative equity – otherwise known as ‘going underwater’ on their home loans.
Negative equity occurs when an individual’s outstanding mortgage balance is more than the value of their property.
In a strong market, homes should appreciate in value over time – meaning borrowers have little risk of falling into negative equity.
Related: Northern Virginia Office Owner Defaults On $51M Loan
Investors fear losing life savings in Sky Building eyesore
Dozens of investors fear being left millions of pounds out of pocket – after sinking their life savings into a stalled student flat development. The Sky Building, in Newcastle, has remained an unfinished eyesore since 2017 after its original developer ran out of money.
That was despite selling leases to more than 100 investors for around £50,000 each and promising them a healthy return once the scheme opened. Several owners have come and gone over the last five years, but no further progress has been made on the development.
Built4Learning, the most recent previous owner, went into administration earlier this year after it failed to repay a £2.3 million loan. The current owner – ECX Acacia Ltd – has yet to reveal its plans, leaving leaseholders in the dark as to what will happen to their investments.
Anthony Orme paid £59,950 for a studio apartment at Sky Building. He now wants to warn other people of the dangers of investing in property off-plan.
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