Due to the drop in real estate prices in Southern California market over 102,000 homes in Orange County are underwater. Not literally off course, the value of these homes is lesser than the mortgage amount owed. Although the numbers are lower than the previous year it’s not an indication of improving real estate market. One of the reasons the numbers have declined is ever-rising the number of foreclosures. Foreclosed homes simply are not counted. Nevertheless this number represents 18.1% of all Orange County a real estate inventory.
On the national level the number of homes which are upside down on their mortgages is even higher, 23% of all households worth less than the amount of money borrowed, which equates to 11,000,000 households.
The state of Nevada has the highest number of on the water mortgages -68%.
The next state is Arizona with close to 50% of all mortgages.
Florida – 46%. Michigan – 38%. California – 33%.
Close to 4.8 million of home owners if the United States have what it’s called “severe are negative equity” where the home value is worth only 75% or less of the outstanding mortgage balance.
Ironically negative equity is one of the main factors that contributes to the number of foreclosures and foreclosed properties in turn are being subtracted from the number of homes with negative equity when statistics on underwear mortgages are being calculated.
Many home owners are looking to modify their mortgages and some make efforts to divest themselves from plunging real estate through the means of short sales. The increasing numbers of short sales show their popularity as well as help to produce more upbeat statistical analysis as to quarterly real estate transaction numbers.
Upside down mortgages or underwear mortgages are not the worst that is happening to the American homeowners. After all real estate just like any investment includes elements of risk despite the fact what we were told by the financial advisers for a long time. The bigger problem is the loss of jobs and replacement of high paying jobs with low paying jobs. Orange County has lost thousands of jobs just in the last quarter. You don’t have to have an economics degree to figure out if there is no job there is no money and if there is no money there is no place that you can call home.
California’s real estate market relies on employment more than anything else; hopefully our elected officials understand that.
Read about the future of California Realtor Career specifics here