Skip to comments.More Than Half Of Sacramento-Area Mortgages Are Under Water [CA: 42% Homes "Under Water"!]
Posted on 08/13/2009 9:55:44 PM PDT by Steelfish
August 13, 2009
More than half of Sacramento-area mortages are under water
UPDATE: Here are the local numbers: Rather shocking.... In Sacramento-Arden-Arcade-Roseville-Woodland, 257,871, or 51.10 percent of all properties with a mortgage, are in negative equity.
Santa Ana-based First American CoreLogic just minutes ago released a grim look at the mortgage crisis, reporting that
32.2 percent of all U.S. mortgages were tied to homes worth less than the amount of their loans.
In California, it says, 42 percent of mortgages are in that condition often referred to as "under water."
The report says 2.9 million California mortgages are in a state of negative equity and 3.1 million more are nearing it as the housing crisis persists and the economy worsens.
Nationally, 15.2 million mortgages tied to $3.4 trillion worth of residential property are in a negative equity position, and consequently in some danger of foreclosure, says First American.
The firm didn't immediately have a Sacramento-area breakdown, but in the past has said that more than one-third of the region's mortgages were in that condition. We have an email into the firm to try and get the regional picture.
(Excerpt) Read more at sacbee.com ...
This is beyond “Those people had it coming to them.”
No worry. Obama bailout assured.
How does negative equity lead to foreclosure? Make the payments long enough/values recover and you won't be underwater.
I’m in Florida, but there are many people who did it right, 20 percent down, fix rate mortgage, no home equity loan, etc....and they are underwater.
If you bought anytime in the last 5 years in Florida, you’re more than likely underwater on the mortgage and it has nothing to do with being irresponsible, it has to do with falling property values.
I’ve mentioned this before, but we recently purchased a foreclosure and the price per sq ft was less than the price we paid for our home (price per sq ft) and we bought over 20 years ago (same neighborhood.) So prices are at a historic low and I just feel sorry for those who happen to get in the market at the wrong time.
As long as the illegal aliens get their unlimited free benefits - all is well in CA.
Until the idiots vote the Dems out - it will only get worse.
I think the danger of foreclosure comes into play if a person should lose their job, or have their wage reduced. In the past, you could refinance, maybe take a longer term, and find a way to make the payments even through financial difficulties in your earnings.
If you’re underwater, nothing you can do to refinance. You owe 200,000 and the house is worth 150,000...no banks going to help you out, so you’re stuck. True, as long as you have your same job, and can afford the payment, there’s not a problem (I know many young couples in that situation...they are making the payments even though they don’t see themselves recovering the “lost” equity for at least 10 years.) But any flux in your earning ability and it’s either a short sale or foreclosure.
But if they are in default, re-financing might not become possible or if they are out of a job.
[This is beyond Those people had it coming to them.]
I now believe almost every bank in America is now insolvent. The next wave of failures will be horrendous.
If your mortgage payment is higher than rent on the house down the street..then the banks are in trouble. That is exactly the case in many CA neighborhoods. Only your credit rating and character keep you paying on the house.
A lot of people are doing it and hoping for the best.
My payment is 52.00 over the going rent. I’ll sit tight.
My son is in this perdicament. He bought his house 3 yrs ago. It appraised at $329,000, he bought it for $309,000. Today it appraises for somewhere between $180,000 - $188,000.
They couldn't keep payments going on two homes, and got foreclosed on the older home, losing it as well as the extra money they put into it because they were underwater. They're grateful they were able to hold on to the new home, but they are barely scraping by.
Hard to feel sorry for people who bought into a frenzied bubble when I made the responsible decision to continue renting.
Should be a very interesting year or two ahead of us.
“Even with all this, prices in my SoCal neighborhood are STILL ridiculously high”
Southern California still has falling and foreclosing to do. The coming months will show as much. Sorry, gang, but $80k per year doesn’t buy a $550k house.
If people would buy a house they can afford and use it for what it was intended to do, live in, and not an “investment” or ATM equity machine they would all be fine as long as they are still employed.
In the 30 years it took us to pay our house off there were several bumps and jumps in our income but the house was not so high priced we could not manage the payment. In that time we also experienced the rise and fall of its value but it for living and raising a family, not a loan/equity/re-fi machine.
What does this actually mean? What % of these “under water “ mortgages are ARM’s? The only time figures such as this are important is if % cited are all loans coming up for renewal and won’t be because the loan to value ratio is out of whack.
If I own a home with a $100,000 mortgage and the home is now worth $75,000, it matters not to me unless I am selling the home or as I said above, if my ARM is up and due to be recast.
If they bought the home to live in and not on spec, they have no problem,
Whether or not they are underwater, they can still pay the mortgage off. Thirty year fixed mortgages are valuable now, because the prospect of inflation is fairly significant. In a decade this will all sort itself out.
The young couples I spoke about are all staying in their homes...at present they still have jobs (although a few have seen their salaries cut.) They can “afford” the mortgage, it’s just that renting would be hundreds cheaper per month, and if not for moral fiber, they’d probably walk away, as I suspect many will or are doing. One couple told me it’d be cheaper for them to rent their home at a loss (which they are considering doing) and then rent an apartment themselves. Sounds hard to believe but they’d be less in the hole doing that than continuing to live in their home and make the payments themselves. House prices in Florida have fallen, but property tax, and insurance are still high, so it’s a double whammy.
I would look at it like a stock. In a few years the prices will recover, and in the interim the mortgage interest, property taxes, etc. are all deductible.
I agree, but I think it’ll be more than a “few” years for prices to recover. My reasoning on that is twofold: one prices have taken a precipitous drop and two, interest rates are bound to rise which, IMO, will further depress prices from returning to the level they were. We recently bought a foreclosure at 1/3 of the price it sold for three years ago...so prices have a long way to go to climb back up to their previous level of the last few years.