California Still Has Plenty of Homes Worth Less Than Mortgages

Nearly one in four homes in Virginia with a mortgage attached to it is “under water” – with the property owner owing more than the home currently is worth – according to new figures from the second quarter of the year. Virginia’s rate of 23.3 percent is nearly a full percentage point higher than the national average, according to new statistics released by CoreLogic, a California firm that tracks real estate data and trends.

In addition to the homeowners in Virginia whose mortgages exceed the current value of their properties, an additional 6.1 percent are in the “near-negative” category, where property values are within 5 percent of the amount owed on the mortgage. That rate, too, is higher than the national average.

The situation was worse in the Washington metropolitan area: Counting the District of Columbia and Maryland suburbs in addition to Northern Virginia, nearly 290,000 residential properties with a mortgage – 28.3 percent – were in a negative-equity condition in the second quarter, with an additional 5.5 percent approaching that situation.

It is, analysts say, a situation that must continue to show improvement in order for the housing market nationally and at the local level to return to health.“High negative equity is holding back refinancing and sales activity, and is a major impediment to the housing-market recovery,” said Mark Fleming, chief economist of CoreLogic.

“The hardest-hit markets have improved over the past year, primarily as a result of foreclosures,” Fleming said. “But nationally, the level of mortgage debt remains high relative to home prices.”
Local rates may be higher than the national average, but are nowhere near the rates in some parts of the country, where the real estate bubble has hit the hardest:

* In Nevada, 60.4 percent of homeowners with mortgages had negative equity in the second quarter, down from 68 percent a year before due largely to homes being foreclosed on. An additional 4.9 percent are in the near-negative category. The value of homes of Nevada homeowners with mortgages is currently $100.8 billion, but the total owed to lenders is $113.6 billion – the only state where the ratio tops 100 percent.

* In Arizona, 48.7 percent of homeowners with mortgages are under water, with another 4.8 percent close to that mark. Arizonans with mortgages own properties valued at $248 billion and have debt of $231.4 billion, or 93.1 percent.

* In Florida, 45.1 percent of homeowners with mortgages have negative equity, with an additional 4.3 percent approaching it. The total value of their properties is $819.3 billion, with 87.8 percent of that tied up in mortgage debt.

* In California, the largest state in terms of property values, homeowners with mortgages own a collective $2.8 trillion in homes, with $1.96 trillion of that – or 70 percent – tied up in mortgages. California ranks fifth nationally in the percentage of homeowners under water, behind Nevada, Arizona, Florida and Michigan.

* In Virginia, homeowners with mortgages own a collective $426.8 billion in residential real estate, and owe just under $305 billion to lenders – a ratio of 71.7 percent. Nationally, the rate is 69.8 percent, representing $12.6 trillion in property value and $8.8 trillion in mortgage debt.
Figures represent data through May, and include 48 million properties with a mortgage, about 85 percent of all mortgages in the U.S.

CoreLogic also found that homeowners with negative equity tend to be saddled with higher-interest mortgages.