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One of the consequences of the housing crisis has been a spike in the number of homeowners with underwater mortgages: Those whose home values have decreased to a number less than what they still owe on the house. With an underwater mortgage, when it comes time to sell your home, you actually have to pay the balance to the bank, rather than walking away with a profit. It’s one of the factors keeping the housing market tight, since many who want to sell their homes are waiting until prices increase to a point where they can at least break even.
In D.C., 31 percent of homeowners have underwater mortgages, the Post reports this morning. Putting that number in context: It’s higher than the national average of 28 percent, according to statistics out last week from CoreLogic. But it’s downright healthy compared to the situation in Nevada, where the number tops 70 percent. As real estate values rebound, the number of underwater mortgages will naturally decrease, and we’ll probably see more of those houses come back onto the market—which, according to the laws of supply and demand, may in turn have a dampening effect on the pace of the rebound, right?