Of all the homes foreclosed on nationwide between January 2007 and December 2015, 45.4% were in the bottom-third in terms of home value, according to Zillow Research.
When the recession started, many of these lower-income borrowers lost both their homes and anywhere between 62.5% and 81.2% of their net worth. Now forced to rent, these households had to lose a large part of their income each month that did not contribute to their overall wealth, and often lost the chance to regain their lost wealth as the values of the homes they used to own rose out of their reach.
Less-well-off homeowners that succumbed to foreclosure as the housing market went bust, destroying the value of their largest asset, have very likely missed out on the immense wealth-creation the subsequent housing recovery has enabled.
Meanwhile, those typically wealthier homeowners able to hold on to their homes throughout the worst of the housing bust have likely seen their wealth only increase throughout the subsequent recovery. . This difference in fortunes… illustrates the ways in which the Great Recession helped widen the already yawning gap between the nation’s rich and poor.Read More