One Third of New Owners Owe More Than House Is Worth (Update1)

Aug. 12 (Bloomberg) --By Bob Ivry

Highlights

• "Almost one-third of U.S. homeowners: who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations."
• "Second-quarter home prices: fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said."
• "Prices fell on a year-over-year basis: in 140 out of 165 markets, Zillow said. Pittsburgh, Oklahoma City and Austin, Texas, were among the markets that saw rising home values, the company said."
• "Zillow Home Value Index: is the median valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period, the company said. The index at the national and metropolitan area levels is calculated using a weighted average of the median home value for each county."

Comments:

Using your home as an ATM: Obviously those days are gone for now. But they sure did make it easy to spend your home equity. Now all that buying power is out of the market and you still have a debt hangover to repay.

Proud Negative Equity Homeowners: Not sure this is part of the American dream and wonder how it is going to play out with unemployment on the rise and times getting harder for everyone. What do you do with a home that has a large negative equity position, just mail in the keys with a short note, "Don't like it anymore you keep it".

Foreclosures: With almost 15% of the home sales foreclosure property I don't view these added sales as a positive. Yes, inventory reduction but are we encouraging others on the fence to jump into the foreclosure market to cut their losses. I mean, why pay and extra $100k if you can just walk away and rent a house for a while till the market settles down.

Jim