Almost half of all mortgage holders in Nevada now owe more than their house is worth. Mindboggling to think about. Basically what that means is if you want to sell your house, you’ve got to write a check to the bank on the day you close. Nationwide, the percentage of homeowners with mortgages underwater is 18.3%, with another 5% on the cusp.
The data aggregator First American CoreLogic put out a state-by-state breakdown today (no link yet, sorry), and at the top of the list are the usual suspects—Nevada (47.8%), Michigan (38.6%), Arizona (29.2%), Florida (29.2%), California (27.4%), Georgia (23.2%), Ohio (22.0%). Mostly we’re talking about states that saw a big price boom and a lot of speculative buying, or states with dismal local economies.
What’s in a way scarier, though, is that First American is also seeing a third group of states emerging—those where a lot of new people moved in and bought houses and simply didn’t have much time to build equity before prices started falling. That partly accounts for why Georgia is so high up on the list, as well as growing problems in Texas (16.5%), Arkansas (16.3%) and Tennessee (15.0%). Other standard drivers of negative equity—a higher than average share of subprime loans and higher average loan-to-value ratio at origination—are also at play.
States with the smallest problems are New York (4.4%), Hawaii (5.6%), Pennsylvania (5.7%), Montana (6.9%), Alabama (7.4%) and Connecticut (7.4%). I should also mention that the survey covers about 80% of outstanding mortgages, and seven states didn’t have enough data to come up with a percentage.
The one state that doesn’t make any sense to me is New Hampshire, where 17.2% of mortgage holders are underwater. Maybe someone out there in America can explain what’s going on in the Granite State.
Barbara!