The Virginian-Pilot
©
The number of homeowners in Hampton Roads who owed more on their mortgages than their homes were worth grew to more than 72,000 at the end of last year, according to a new report.
That's nearly one in four local mortgage borrowers - 22 percent - who are "underwater" on the loans, according to First American CoreLogic, which is based in Santa Ana, Calif., and tracks mortgages across the country.
The number of borrowers underwater grew 0.7 percent during the fourth quarter, the firm reported this week.
First American's quarterly report also said that 21,374 more mortgages will be underwater if home prices in the area decline 5 percent from their current level.
This is the fourth time the company ha s reported figures for Hampton Roads.
Homeowners who purchased at the peak of the local housing boom, especially with little or no down payment or an interest-only loan, are the most susceptible to finding themselves underwater in a loan. Falling home values can erode any equity homeowners have in a newly purchased or refinanced home.
The decline in home prices in the region has slowed in recent months as first-time buyers helped stabilize the market in the lower price ranges.
Median prices on existing homes in South Hampton Roads fell 5.74 percent for all of 2009 compared to 2008, according to figures from Real Estate Information Network, the Virginia Beach-based multiple listing service.
Economists and real estate experts say that owing more on a home than it's worth is one of the most common precursors to foreclosure.
"Negative equity is a significant drag on both the housing market and on economic growth," said Mark Fleming, First American CoreLogic's chief economist, in a news release. "It is driving foreclosures and decreasing mobility for millions of homeowners."
While not every homeowner in negative equity will go into foreclosure, it reduces their ability to sell the homes without taking a loss - a situation known as a short sale.
Bank repossessions and foreclosure auctions in Hampton Roads have also remained at high levels in recent months, and First American's report indicates foreclosure activity could grow, dampening the prospects of a quick housing recovery.
Across the country, the number of homeowners owing more than their homes are worth grew to more than 11.3 million - or 24 percent of all residences with mortgages, First American reported.
The majority of such negative-equity loans are in Arizona, California, Florida, Michigan and Nevada.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
Delicious
Digg
Reddit
Facebook
Twitter
Google
Yahoo
Not yet
Just the backyard is, but with all this rain, one only knows how long it will be.
Fortunately I don't live in a flood zone, so I don't have to worry about the whole house being underwater.
How could that be?
How could that be if the assessments are dropping?
huh?
If assessments are dropping, people will be MORE underwater. If I owe $400,000 on a house I bought when it was assessed for $400,000 and now it is assessed at $300,000, that means I am underwater. If they drop the assessment to $250,000, that means I am even MORE underwater. My six year old explained that to me.
Dig deeper in the report.
"The majority of such negative-equity mortgages are in states such as Nevada, Arizona, Florida, Michigan and California." Next on the list Georgia, followed by Virginia. All told, this state has 30 percent negative equity including the homes that are currently breaking even before the next leg down. The only time home sales increase is when the banks clear their books of foreclosures. Commercial real estate is ready to follow as developers miss loan payments due to vacancies and sharply lower rent receipts. Yet city governments are planning their budgets based on assessments that are out of touch with the new reality that homeowners and builders WILL increasingly walk away from their investment. It's a trick they learned from the Wall Street bankers that started this mess with their greed.
Tells us a lot...
It tells us that quite a few people out there should NEVER have been homeowners, but thanks to the greediness of the banks they were given loans anyway...just like people who end up getting their cars repossessed...stop this credit crap and start paying cash (or at least be required to put down 50% of the price in cash)! It you don't have the money...oh well, it's just too sad! Go live in a tent!
Don't forget the US Gov't
Don't forget the US Gov't role in this. Barney Frank? Fannie Mae and Freddie Mac buy a bunch of the paper to make sure the down trodden can buy homes.
Housing would probably be much cheaper if the gov't wasn't involved.
Don't forget the insane amount of fraud with Fannie Mae. The guy who profited from it, and pocketed millions, paid nothing back and continues to get paid $100K a month. Meanwhile the damage I believe cost over $2 billion to clean up. (Franklin Raines)
Dunno. Country is a mess. Not sure if we will ever properly recover from it.
dont forget the board members
all the board members that made a killing on the deals are now in power
Fannie & Freddie are actually artificially propping up prices
because they are buying the debt to hold down the interest rates. When they stop buying this spring expect rates to increase. Just look at the jumbo loans. Very few buyers of these loans so the rates are historically at a high spread to conforming loan rates.
rent or mortgage, you still have to pay
Whether you rent or pay a mortgage, you still have to pay regardless. So, why not pay on something that will one day be yours versus be someone else's?
Because if you rent a place
Because if you rent a place from someone who bought before the housing run up, you can save more money than you *might* gain by buying. There is a holding cost to owning (upkeep, maintenance.) Also, in modern day and time, you are more valuable in the work place if you can relocate.
In the end, if housing prices fall though, and owning is once again cheaper than renting (as it should be), then it might be a valid argument.
We're going to be left with a over-supply of housing as well, with the population trends and the baby boomer generation dying.