More Than 20% Of U.S. Homeowners Are Underwater

More Than 20% Of U.S. Homeowners Are Underwater 

Approximately 22 percent of U.S. homeowners currently have mortgage balances greater than their home values reflected for 1Q, according to Zillow’s first-quarter Real Estate Market Reports.

The first-quarter reflects a four percent increase in underwater borrowers from the 17.6 percent the previous quarter, according to Zillow’s report.

The nationwide home prices for the first quarter dropped 14.2 percent from 12 months earlier, to reflect a median of $182,378.

The current housing crises, with the plummeting housing prices, have slipped additional homeowners into a negative equity status, Zillow reported.

Almost 60 percent of mortgages issued in 2006 are currently higher than their home value, with the most troubled homeowners as the ones who bought prior to the bubble bursting when the lending standards were more flexible.

With the new stringent lending practices, fewer purchasers are upside down on their homes, even though housing prices continue to edge downward.
About a third of mortgages issued in 2008 are currently underwater, Zillow says.

“Slowing declines in select markets are a bright spot or, at least, what passes for one given current market conditions,” stared Zillow VP of data and analytics, Dr. Stan Humphries in a statement.

“Unfortunately, given the magnitude of the current rates of decline, we’re still many months away from a bottom even as depreciation slows,” Humpries claims.

“Moreover, the additional information we have this quarter on ‘shadow inventory,’ with one-third of homeowners indicating they would like to put their home on the market if conditions improve, confirms our earlier fears that a bottom in home values could be quite protracted.”

“By our calculations, this could translate into as many as 20 million homes that could seep into the market as prices stabilize; maintaining a constant stream of supply that far outpaces demand, thus keeping prices flat. I’m doubtful that we’ll see the bottom until 2010, and thereafter it’s increasingly clear that we’re likely to have a long bottom before we see meaningful recovery in home values,” said Humphries.

The most current negative-equity data doesn’t reflect a recovery in the near future, Humphries adds.

“I’m doubtful that we’ll see the bottom until 2010,” Humpries said, “and thereafter it’s increasingly clear that we’re likely to have a long bottom before we see meaningful recovery in home values.”

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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