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Inequality still a major issue in the US housing market

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Overall home values in most major markets have recovered in the decade since the housing market collapse, but many neighborhoods are still struggling to find solid ground, according to a new study by the listing site Zillow.

“We have long known that economic downturns leave scars. But these scars cut deeper and persist longer in the most exposed communities,” writes  Aaron Terrazas, a senior economist with Zillow, in a statement.

Whether a homeowner has regained the value lost during the crisis is largely driven by how many neighboring homes went through foreclosure following the bust.

In 2008, national home values fell almost 26 percent, and millions of Americans lost homes to foreclosure. Nearly 33 percent of homeowners who didn’t lose their homes due to foreclosure were underwater on their mortgages.

Homes in zip codes that suffered the highest foreclosure rates following the bust are returning to their pre-recession peak value at a much slower pace than homes in nearby neighborhoods that saw fewer foreclosures.

In the country’s largest 35 metro areas, over 54 percent of homes in areas with the fewest foreclosures during the bust have fully recovered, compared with about 39 percent of homes in areas with the most foreclosures.

And in 19 of the top 35 markets, areas that saw relatively few foreclosures during the housing bust have seen home value gains at least 10 percentage points greater than areas with a greater rate of foreclosures.

In 13 metros, the rate is at least double and in three — Riverside, CA, Las Vegas, NV, and Washington, DC — it is at least four times greater.

Five metros — including Chicago, IL, and Miami, FL — have seen the opposite play out, with high-foreclosure areas recovering at a slightly higher rate.

The gap between high-foreclosure and low-foreclosure areas is especially pronounced throughout California and much of the Midwest.

Taken as a whole, 21 of the top 35 largest metros have recovered their pre-recession high median home values, including four that are more than 50 percent higher.

Nationally, median home values are nearly 10 percent above what they were at the bubble’s peak and today less than 10 percent of homeowners are underwater on their mortgages.

And with the Great Recession far in our rearview mirror, many economists are starting to wonder how some still vulnerable markets will fare when the next recession hits — possibly as soon as the end of 2019. However, many of the conditions that prompted the last downturn — such as lax lending standards and excessive new construction — are notably absent in the housing market today.

“The risks facing the American housing market today are much different from the risks of a decade and a half ago. For those homeowners who are still underwater, if their home value drops it will take them longer to gain positive equity,” Terrazas tells Livabl.

And if those homeowners aren’t planning to sell, they can hopefully wait it out — but homeowners who need to sell their home may be facing a short sale during the next downturn.

The US is rapidly closing in on its longest economic expansion on record, and if it lasts beyond next summer, it will set a new record. However, there is nothing automatic that says the economy will shift toward a recession once it passes that hallmark.

“While home value appreciation is slowing, it’s still growing more than twice as fast as its historic average pace. While buyers certainly have more bargaining power than they did a year ago, nationwide it’s still a seller’s market and should continue to be so on the near horizon,” says Terrazas.

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New home? Prepare for the unexpected

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(NC) Buying a house, getting married or having your first baby are all major life events that are likely to affect your finances. But whether you’re in the midst of a major life event or not, it’s important to check in on your finances regularly to maintain good financial health.

Your financial health encompasses things like your spending, savings, borrowing and future financial plans. It also means dedicating a set amount of savings for unexpected future events. It can even include optional credit protection insurance, such as TD protection plans, to help cover your debt balances in case of death, a covered critical illness or total disability.

Even though it can be tough to think about the unexpected, life is unpredictable and it’s important to plan for the unexpected. Find more information at td.com.

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Mortgage pitfalls to avoid

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(NC) Throughout life, you may have moments where you’ll make a large purchase or invest in a costly item, like your family home. But whether you’re in the market for your first new property or already have a mortgage, leaving this asset unprotected can be costly.   

Insuring your housing financial debt, as well as debt for other big-ticket items like a new boat for your lakefront cottage or keepsake jewelry like an engagement ring, is a smart investment in your well-being.

To help protect your debt balances like a mortgage, your bank may have optional credit protection insurance products.

“Your home is one of your biggest assets, yet illness can happen at any stage of life. Worrying about your mortgage when the focus should be on health isn’t a situation anyone would wish for,” explains Shirley Malloy, vice president at TD. “Fortunately, we offer mortgage protection to provide coverage for your outstanding balance should you face a covered critical health event.”

Mortgage protection can be purchased whether you’re in the process of applying for a mortgage or already have a home financing solution. But what about protection options for credit card debt?

“Given the unprecedented circumstances of this year, many Canadians are trying to plan for the unexpected to protect themselves and their finances,” says Malloy. “TD balance protection plus is an optional product designed to help you deal with your credit card payment obligations in the event of a covered event, such as loss of employment.”

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Is your internet too slow? It’s probably not you

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(NC) We all know the aggravation of a school lesson that just won’t stop freezing or the family video call that looks more like a photo montage. And, as we adjust to the impact of COVID-19 on our day-to-day, that slow connection can have frustrating consequences.

Working from home and learning remotely, both need fast, stable internet, something not enough Canadians have yet. Even if you have fast devices in your home, if the infrastructure in your area is not optimal, your connection won’t be either.

Right now, cities have the infrastructure needed to ensure access. But rural and remote communities are hugely underserved, with fewer than half having high-speed internet, and fewer than a third of households on reservations have high-speed connections.

Fortunately, change is coming. The Universal Broadband Fund is backing projects across Canada right now to ensure the reliable, high-speed internet connections families need to work, study, access services online, and safely stay in touch with each other.

The fund existed before COVID, but as a response to the pandemic, its timetable has been moved up by four years to a target of 98 per cent of Canadians with high-speed internet access by 2026. With the faster pace, at least 90 per cent of us should be connected by the end of 2021.

The fund is focused on improvements in rural and remote communities across Canada to fix the disconnect between internet access for urban and rural households.  This means more remote work opportunities, better access to remote learning and safer access to healthcare, no matter where you live.

It’s not just for good connections at home, either. The improvements mean much better access to mobile networks on highways between remote communities. The result is better, safer navigation and access to emergency services for your family, even on the road in the middle of nowhere. Mobile projects will be focused on serving Indigenous communities and the roads leading to them.

The shape these improvements will take in your area will depend on where you live. Canada is huge, and its communities are hugely diverse, with diverse needs. Keep an eye out for local projects — they’re a small part of something much bigger.

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