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Gen-X remains deepest underwater on home mortgages

Mortgages
Gen-X is victims of bad timing in housing market. Nearly half of underwater mortgages belong to 35-44 yr olds
Big mortgage debt could lock in Gen-X homeowners and gum up broader housing market, @zillow says
"Underwater" mortgage rate falling as price rise, but remains higher for 30-, 40-somethings

The mortgage crisis may be easing, but it's still hitting some people harder than others.

Nearly half of all mortgages that are still "underwater" in Los Angeles and Orange Counties are held by homeowners aged 35 to 49, according to a report out Tuesday from real estate website Zillow.

For the record: An earlier version of this post contained incorrect information provided by Zillow about the share of homeowners who are "underwater" on their mortgage.

Just 9.3% of homeowners in metro Los Angeles now owe more on their house than it is worth - barely half the rate a year ago and well below the national average of 17%. Of those loans, 45.8% are held by members of so-called "Generation X."

Largely, this is a function of timing, said Skylar Olsen, an economist at Zillow who wrote the report. Baby Boomers and older buyers had more time to pay down debt and benefit from price run-ups before the housing crash. Younger buyers – Millennials – largely haven’t yet bought houses, but those who have benefited from low prices after the bust and likely made a large down payment. But Gen-Xers were entering prime home-buying years a decade ago, just as prices soared, then plunged.

“They were the ones who bought the most at the bubble,” Olsen said. “They’re your shoppers during those peak days. And they were hit the hardest.”

In the second quarter in metro Los Angeles, 11.7% of Gen-X homeowners were underwater, compared to 8.3% of Millennials and 7.2% of Baby Boomers, according to Zillow's data.

But more borrowers of all ages are getting their heads back above the surface. At 9.3%, the share of homeowners with "negative equity" in the second quarter in metro Los Angeles sits at less than one-third of its peak from early 2012. By this time next year, Zillow projects, it’ll be 7%.

Keep an eye on housing and real estate in Southern California. Follow me on Twitter at @bytimlogan

Copyright © 2014, Los Angeles Times
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