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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

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4 Comments

  1. Ricardo Sorentino

    One more statistic I’d like to see: what percentage of these home are ‘underwater’ because it was purchased at or near the height of the pricing market, and how many are underwater simply because the sucked out ten’s of thousands of dollars of equity for new cars, vacations and other toys.

    March 8th, 2011 3:35 pm

  2. R Armstrong

    Held captive in your own house, tortured by your lenders, abused by lawyer, left to die quietly buy your government, all the while talking help while giving none. The lending community doesn’t want to head about “Underwater” housing. There are no devastated realestate moguls, no homeless bankers, no trashed leners whose FICO SCORE IS IN NEGATIVE NUMBERS. Our friends and neighbors have used up their retirement funds, cashed in the stocks or what was left of them, sold the toys cheap, and are now being forced out of their homes. SOME RECOVERY.

    March 8th, 2011 5:35 pm

  3. Good Times

    The old saying “are you going to believe your lying eyes or what I am telling you” is useful here. This is the logic Obama uses to tell us the Great Recession is over and we can all go back to work and shut up. With a 1/3 of the houses underwater and unemployment at 15% in California, what part of Great Recession don’t you understand?

    March 9th, 2011 7:13 am

  4. s pareto

    @ Ricardo: People made stupid decisions, but they were aggressively encouraged! Read TRUMPED! for a good laugh about how easily it happens.

    March 9th, 2011 8:29 am

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