Nearly a third of Sonoma County homeowners with mortgages remained underwater at the end of last year.
Almost 31,000 residential properties — 29 percent of homes with mortgages — were in negative equity in late December, according to a report released Tuesday by CoreLogic of Santa Ana.
The latest data compares with almost 32 percent in negative equity a year ago and 28 percent in September.
“Negative equity holds millions of borrowers captive in their homes, unable to move or sell their properties,” said CoreLogic chief economist Mark Fleming. “Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish.”
Twenty-three percent of all U.S. residential properties with mortgages were upside down in December. That amounts to 11 million homes.
Nevada was hardest hit, with 65 percent of such properties underwater. It was followed by Arizona, 51 percent; Florida, 47 percent; Michigan, 36 percent; and California, 32 percent.
CoreLogic produced the report by gathering mortgage data on 48 million residential properties and then estimating the homes’ current value.
Sonoma State University economics professor Robert Eyler said one impact of negative equity is for the affected homeowners to pull back on major purchases.
“It may make people more reticent to spend money,” Eyler said. When homeowners owe more than their home is worth, they “don’t want to generate any more debt.”
But both Eyler and Coldwell Banker real estate manager Rick Laws said the data by itself won’t help predict trends in the housing market.
One reason is that homeowners won’t experience an actual loss if they don’t have to sell their properties now. However, those who can no longer afford their homes or who face adjustments to their mortgage terms will find it a difficult time to sell.
For such sellers, “it’s been brutal and it’s devastated a lot of people,” said Laws, “especially those who had the time bomb loans.” He said most of the damage already has been suffered from those loans, which offered low introductory rates but came later with higher payments that buyers couldn’t handle.
— Robert Digitale