Nearly 1 In 4 Mortgages Under Water
December 5th, 2009 categories: Seller Resource, Short Sales
Sometimes when I wrote articles, I write about news of the day. Today, I am writing about news, that may be construed as bad news. We think it is just news, and want to make sure we give all the Real Estate news, not just good news, or what may be seen as one sided. We like to think we are unbiased, and report on what is important to people. Anyway…with that said…
1 In 4 Mortgages Under Water
Nearly 1 in 4 mortgages are “underwater.” What does “underwater” mean exactly? It may be a new term to some, but it is all too familiar for many. Basically, an underwater mortgage is one in which the homeowner owes more on the home than the home is worth. The term “underwater mortgage” in this case, is synonymous with the term “upside down mortgage.”
Research firm First American CoreLogic found that 10.7 million mortgages were underwater…this represented 23% of all outstanding U.S. mortgages. They also reported another 5% of all mortgages were very near negative territory. Any downward shift in home prices could increase the 23% number largely.
Most of the underwater mortgages are within 4 states, Arizona, Nevada, Florida, and California. The numbers for those states were not promising…65% of all Nevada mortgages were underwater, 48% of all Arizona mortgages were underwater, 45% of all Florida mortgages were underwater, and 35% of all California mortgages were underwater. These states will help to shape the future of Real Estate prices, whichever direction they may go.
So what is the big deal with underwater mortgages? The thought is that people may not want to continue investing in an asset on which they owe more than the worth. If this happens, we may see more short sales, and more foreclosures. More short sales and foreclosures could potentially pull market prices down, killing hopes of a Real Estate recovery in 2010.
If you have any questions regarding mortgages, the current mortgage situation, or Sonoma County Real Estate, please feel free to contact us, 707-771-0338 or WineCountryMoves.com . We love to hear from our readers.
