Graph via Dr. Housing Bubble.
Reuters – One in five homeowners with mortgages under water:
NEW YORK (Reuters) – Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.
About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.
The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.
Seven hard-hit states — Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio — had 64 percent of all “underwater” borrowers, but just 41 percent of U.S. mortgages.
Foreclosure filings rose 71 percent in the third quarter to a record 765,558, according to RealtyTrac.
Last week, Wachovia Corp said borrowers with its “Pick-a-Pay” ARMs and living in or near Stockton and Merced, California, owed at least 55 percent more on their mortgages, on average, than their homes were worth. Wells Fargo & Co is buying Wachovia.
Owing more than their house than is worth is going to create economic despair for millions. No wonder consumer confidence is so low. Some homeowners will stick it out until the market recovers, but others will walk away from the moneyhole. ARM resets will only accelerate the trend. It’s going to get ugly.
Previously:
- More bad real estate news
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