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2012-03-07 05:43:55
Underwater Mortgages on the Rise

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10 states sunk by underwater mortgages

underwatermortgAs home prices continue to slide, more and more homeowners find themselves owing more on their homes than those houses are worth. The slowing level of foreclosure activity last year only exacerbated the problem, leaving more homes in trouble on the market. Last week, Corelogic reported that the number of underwater mortgages as a percentage of all mortgaged homes rose in the fourth quarter of 2011 to its highest level since 2009, the first year the property analytics provider began reporting the data.

According to Corelogic’s Negative Equity report, the mortgages on more than 11.1 million homes, or 22.8% of the nation’s 48.7 million mortgaged homes, are underwater. Based on Corelogic’s report, 24/7 Wall St. identified the 10 states with the highest percentage of underwater mortgages.

Some of the states with a high percentage of underwater mortgage had economic problems long before the recent recession. States like Michigan and Rhode Island have experienced long-term industrial declines for some time. In these areas, drops in home values were only accelerated by the recession.

For most of the states on the list, however, a decline in home values is the main reason homeowners suddenly found themselves owing more on the their houses than they are worth. These states, which include Nevada and Arizona, experienced some of the biggest housing booms in the country. Many homeowners took out mortgages when home values were at their highest. The plunge in housing values was just as big, though. As a result, nearly half of all mortgages in these states are underwater.

24/7 Wall St. relied on Corelogic’s Q4 2011 Negative Equity report to determine the states with the highest percentage of mortgages with negative equity. Because of sample size, seven states were excluded from their results. These states, which include Wyoming and Vermont, account for fewer than 5% of the total U.S. population. In our own analysis, we examined a variety of metrics. We included December unemployment rates provided by the Bureau of Labor Statistics and median income, median home value and poverty rate from the U.S. Census Bureau. Declines in home value from peak to fourth quarter of 2011 is from FHFA. Fourth-quarter 2011 delinquency (90+ days) and foreclosure rates are from Corelogic. Forecast changes in home value by state are from Fiserv.

Check out the 10 states sunk by underwater mortgages:

10. Virginia
Pct. homes underwater:
23%
Total property value: $428.46 billion
Mortgage debt outstanding: $307.48 billion
Median home value drop from peak: 16.7% (21st-biggest decline)
Homes in foreclosure or 90+ days delinquent: 4.1% (ninth-smallest percentage)

9. Ohio
Pct. homes underwater:
23.9%
Total property value: $310.62 billion
Mortgage debt outstanding: $238.20 billion
Median home value drop from peak: 14.4% (23rd-biggest decline)
Homes in foreclosure or 90+ days delinquent: 6.9% (14th-largest percentage)

8. Maryland
Pct. homes underwater:
24.3%
Total property value: $418.34 billion
Mortgage debt outstanding: $296.81 billion
Median home value drop from peak: 23.7% (12th-biggest decline)
Homes in foreclosure or 90+ days delinquent: 8.0% (tied for fifth-largest percentage)

7. Idaho
Pct. homes underwater:
25.0%
Total property value: $49.76 billion
Mortgage debt outstanding: $36.58 billion
Median home value drop from peak: 29.3% (sixth-biggest decline)
Homes in foreclosure or 90+ days delinquent: 5.2% (20th-smallest percentage)

6. California
Pct. homes underwater:
29.9%
Total property value: $2.73 trillion
Mortgage debt outstanding: $1.94 trillion
Median home value drop from peak: 46.7% (third-biggest decline)
Homes in foreclosure or 90+ days delinquent: 7.0% (12th-largest percentage)

5. Georgia
Pct. homes underwater:
33.0%
Total property value: $306.59 billion
Mortgage debt outstanding: $252.81 billion
Median home value drop from peak: 26% (10th-biggest decline)
Homes in foreclosure or 90+ days delinquent: 8.0% (tied for fifth-largest percentage)

4. Michigan
Pct. homes underwater:
34.7%
Total property value: $198.05 billion
Mortgage debt outstanding: $165.45 billion
Median home value drop from peak: 30.1% (fifth-biggest decline)
Homes in foreclosure or 90+ days delinquent: 6.5% (19th-largest percentage)

3. Florida
Pct. homes underwater:
44.2%
Total property value: $809.95 billion
Mortgage debt outstanding: $706.00 billion
Median home value drop from peak: 44.8% (fourth-biggest decline)
Homes in foreclosure or 90+ days delinquent: 17.4% (the largest percentage)

2. Arizona
Pct. homes underwater:
48.3%
Total property value: $243.02 billion
Mortgage debt outstanding: $226.22 billion
Median home value drop from peak: 47.9% (second-biggest decline)
Homes in foreclosure or 90+ days delinquent: 7.1% (11th-largest percentage)

1. Nevada
Pct. homes underwater:
61.1%
Total property value: $96.57 billion
Mortgage debt outstanding: $109.94 billion
Median home value drop from peak: 60% (the biggest decline)
Homes in foreclosure or 90+ days delinquent: 13.4% (second-largest percentage)

Nevada’s property value has plummeted since the middle of the decade, losing more than $150,000 on average (more than 50%) in just five years. Nevada is also the only state in the country in which total homeowner debt is actually higher than the total property value of owned homes — nearly two in three mortgaged homes are underwater. As of the end of 2011, 13.4% of mortgages were either already in the foreclosure process or more than 90 days delinquent on their payments.

By Michael B. Sauter, 24/7 Wall St.
March 6, 2012
 
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