CoreLogic: Underwater Homes On The Rise
Posted by Lisa Udy on Monday, April 18th, 2011 at 3:10pm.According to recent data released by CoreLogic, 23.1% of all U.S. home borrowers are underwater up from 22.5% in the third quarter of last year. The increasing amount of homeowners now underwater has a direct correlation with data released last month by the leading analytics company. Home prices, according to CoreLogic, dropped by 5.6% in December of 2010, and according to Zillow, during the fourth quarter of last year, home prices fell a total of 2.6%.
The 11.1 million households underwater total $751 billion in negative equity, up from $744 billion the previous quarter. With home prices still on the decline we can expect these numbers to grow. Right now there are 2.4 million homeowners who have less than 5% equity in their homes. Increased negative equity in U.S. homeowners will increase distressed sales, which will continue to dampen home sales.
The data released also highlighted markets with the highest percentages of negative equity. Coming in first place, Nevada has 65% of all borrowers underwater with Arizona (51%), Florida (47%), Michigan (36%), and California (32%) rounding out the top five. Oklahoma boasts the least amount of borrowers underwater at just 5.8% and markets such as New York, Hawaii, and North Dakota have the least risk for increased negative equity with only 7% of home loans at risk.
If you're looking to buy a home this year, keep in mind that home prices are expected to fall another 5-10% depending on the market. The best way to ward off negative equity is to increase your down payment and be smart about the home you buy. If you do have to buy, look for homes in strong markets with unique attributes that hold value. Stay away from distressed neighborhoods and plan on living in your new home for at least 5-7 years to build up your equity for resale.
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