Posted on 03/04/2009 6:50:02 AM PST by marshmallow
NEW YORK (Reuters) – One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows.
About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic. The percentage of "underwater" borrowers rose to 20 percent from 18 percent.
Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows.
First American said the value of residential properties fell to $19.1 trillion at year-end from $21.5 trillion a year earlier, with half the decline in California. Forty-three U.S. states and Washington, D.C., were included in the study.
While states such as California, Florida and Nevada were particularly stressed, the study showed worrying signs of deterioration in relatively healthy parts of the nation.
"The economic slowdown is broadening," said Sherrill Shaffer, a banking professor at the University of Wyoming at Laramie and a former Federal Reserve official. "As more people lose jobs, it will be more difficult to sustain the levels of pricing and home ownership, and that is a big factor driving down housing prices in more parts of the country."
Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio remained the most stressed states, with 62 percent of underwater borrowers and just 41 percent of mortgages.
Other areas, though, also face more stress. Connecticut, for example, saw a 25 percent increase in homes with negative equity, while Washington, D.C., had a 44 percent increase.
"Even I continue to be surprised at the tentacles of this financial and economic debacle," said Robert MacIntosh.......
(Excerpt) Read more at news.yahoo.com ...
Four in Five U.S. Mortgage Borrowers Are Not Underwater, and could give a hoot about the people who made bad decisions.
I’m convinced that the real bottom of this economic crisis won’t be put in until there is “blood in the streets” style capitulation in the real estate marketplace (housing, commercial, raw land). That must happen in spite of what the Gubmint does to artificially prop it up.
What is happening in the securities marketplace is merely a prelude. The bottom in the stock market will NOT be the economic bottom.
But, are they basketweaving?
Bad decisions - too bad. It is, however, unfortunate that so many more will now be on the chopping block as jobs and incomes disappear.
Are there any States or areas holding fast??
I drove over to OBX a few weeks ago and picked up one of those glossy real estate magazines. The properties listed seemed to have dropped a slight amount but if the magazine is any indication, values are close to where they were a year ago. I suspect, though, most would be open to counter offers which was not true a few years ago when you paid the listed price or there was no sale.
How many are underwater in their first mortgages (excluding second mortgages, or cash-out refi borrowers that spent their peak value?)
That’s a good observation, but not one that Bambi will allow us to know.
Just like their 43 million uninsured - most of whom are uninsured by choice, they just use these figures to justify their socialism.
And everybody is “underwater” in the stock market. It doesn’t mean anything unless you sell.
“It doesn’t mean anything unless you sell.”
What a pantload!
Underwater? Only if you can’t pay or have to sell in a down market. If you’re paying and staying, the market will eventually recover and appreciation will resume.
One in five may owe more than the current value, but only those who have to sell or can’t pay are affected by the value fluctuations. That’s a whole lot fewer than one in five; probably one in fifteen or so.
In DC suburbs here
I figure as long as people continue to pay $600,000 for vinyl and plywood colonials on 1/4 acre lots, side by side, here is no crisis here
yet
If I think about the media’s use of the term “underwater”, I get the feeling of “so what”. A lot of people have had negative growth in a major investment. If they are negative in a second investment property, they made a bad investment. People do that every day. If they are negative in their primary residence, they are still living in the same house and, depending on the mortage type, they are still paying the same amount. Live through it in the long term or take your losses and get to something cheaper.
One can be “underwater” and it doesn’t have to be a crisis if they stand pat, have patience and make their payments on time. Real estate will self-correct in time on its own.
“And everybody is “underwater” in the stock market. It doesn’t mean anything unless you sell.”
So if your stocks fall 95%, that means absolutely nothing unless you sell?
Sorry, that is a nonsensical line parroted by talking heads on the news networks which simply is not true.
If stocks fall 10% or so and have a chance of rebounding, then that statement rings true. But with the market down 50% now, and many stocks down 90%+ and never comming back, that is simply a line of BS.
And 4 in 5 new car buyers are underwater. This is normal for an expense purchase. Owning a house will not be an investment for the next 5 to 8 years, but an expense. Surprise, it normally costs money to live in a nice place.
Addressing the story, not the poster:
So what? If you are happy living in the house, then what’s the problem? Keep paying and one day it will be yours.
The stocks I own are worth more than my house, and many of them are now “Under water”. So where’s my bailout?
Thanks for exposing me twice to your brilliant economic analysis.
We are for one. And it’s not b/c of bad decisions or buying more than we could afford. We never refinanced to borrow (we did to get a better rate), never took out a second. We pay on time and pay more when we can.
We were just unfortunate to buy at the high end of the market. And there is no way we could pay enough to keep up with the $100k+ plus drop in value.
Then there are those of us, along with the tax assessor, who own our homes.
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