Wednesday, November 25, 2009

23% of Homeowners Underwater

23% of Homeowners Underwater

According to this Wall Street Journal article, One in Four Borrowers Is Underwater, First American CoreLogic, a real-estate information company based in Santa Ana, Calif, reports that 23% of US homeowners who have mortgages owe more than their homes are worth (i.e. underwater). See below for the state by state analysis of underwater home owners.

As you can see, according to the map above (click on it to see the stats), 13.2% of Tennessee homeowners with mortgages are underwater with an additional 7.0% being almost nearly underwater (Defined as properties within 5% of being in a negative equity position). While better than the 23% figure stated in the article title, it is fact still a fairly large number which will lead to more problems. According to the article, "These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply. Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American."

The article quotes Mark Fleming, chief economist of First American Core Logic, as saying negative equity "is an outstanding risk hanging over the mortgage market. It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." The article mentions that Fleming believes that borrowers who owe more than 120% of their home's value were more likely to default. This is proving to be significant since according to the article, "Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman." I cover this topic in my blog post Underwater Homeowners Walking Away From Their Homes.

Without going on an on with this post, I will end it with the comment that the increase in the number of underwater homeowners will lead to an increase in short sales and foreclosures (as homeowners give up on regaining their lost equity) and this will in turn put additional downward pressure on home prices.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

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