Look Around: One in Seven is Underwater
By: Stan Humphries, VP, Data & Analytics | August 18, 2008
Last week, we released our Q2 2008 Real Estate Market Reports, in which we reported that, nationwide, 29.1% of homeowners who purchased in the past five years are currently underwater on their mortgages (i.e., owe more on the mortgage than the house is worth). We also reported that almost half (45%) of those that bought at the national market peak of 2006 currently have negative equity. The first chart below shows the number of homes with negative equity as a percentage of homes sold in each of the last five years (broken out by region). As you can see, homeowners buying in the West at the 2006 peak have been hit the hardest with almost 60% of purchasers in that year upside down currently on their mortgage.
After doing a bit more number-crunching, we’re able now to report these numbers as a percentage of all homes, not just homes sold in a given period. The numbers are even more startling than we expected with almost 14% of all single-family homes in the U.S., regardless of when they were bought, currently in negative equity. That’s one in seven single-family homes in the country underwater right now. The second chart below breaks these numbers out by region as well. Here, the impact of significant market declines in California, Las Vegas and Phoenix are evident in negative equity rates in the West which top 18 percent (almost one in five homes underwater). The lowest rates of negative equity are found in the Northeast with only about 6 percent of homes underwater.
In an earlier analysis at the beginning of this year, Moody’s Economy.com reported rates of negative equity at the time of about 10 percent with a projection for rates to near 14 percent by the end of Q2. Indeed, it does appear that we’ve hit those levels as indicated by our own numbers. With negative equity being a factor in foreclosure rates, these numbers are just one more reminder of the severe strain being felt by many homeowners right now.
- Stumble it!
- Categories: Real Estate Analytics
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[…] as easy to dig into the equity of their homes (some recent calculations here at Zillow showed that one in seven American homeowners is underwater on their mortgage), maybe they’re making more minor home […]
Denise Stuart on August 21, 2008 9:16 am
As a REALTOR in Silicon Valley this is the norm in some areas. I work alot in my area of Berryessa which has not suffered as much a downfall with over 30% in Escrow. Thus caused by the school ratings. Making use of the tools a REALTOR needs in a market like this one, choose a REALTOR before you lose your home, they will be able to show you your best options, before you make your final decision.
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[…] data shows one in seven U.S. homeowners is now underwater on a mortgage. For people who bought in 2006, when most markets peaked, it’s nearly one in two — 45%. Thus […]
Brett on August 23, 2008 9:13 am
Brett Shaw from Cyberhomes:
You also reported that many people don’t believe that their homes have decreased in value. Let’s hope that this blindness continues with people who are planning to stay in their homes for awhile. It will rebound. What we don’t need is a housing panic where people think they are losing money because the value of their asset is going down.
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Bill on August 27, 2008 10:42 am
What’s surprising to me is that with all the gloom and doom talk, more than half the people who bought at the PEAK of the market in 2006 have POSITIVE equity.
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[…] recently released our second quarter Real Estate Market Reports, and are excited to share what we’ve found with […]
WealthiHer» Blog Archive » Make Lemonade Out of Lemons: How to Thrive Despite Economic Challenges on September 14, 2008 7:55 pm
[…] Zillow recently reported, “29.1% of homeowners who purchased in the past five years are currently underwater on their mortgages (i.e., owe more on the mortgage than the house is worth). We also reported that almost half (45%) of those that bought at the national market peak of 2006 currently have negative equity.” […]
media kingdom on September 19, 2008 5:44 pm
from a historical standpoint it’s hard to object to the government’s mass bailouts since similar debt-producing methods were put into action to save the U.S. from the Depression; maybe we’ve been headed for socialism this entire time…
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