Well, if there is a silver lining with all of the foreclosures, it is this: there are now fewer homeowners underwater because of them. That’s right, there have been so many foreclosures that according to a recent article by DSNews, the number of homeowners upside-down on their mortgages has dropped from 11.0 million to 10.8 million. These numbers were produced by CoreLogic, a leading real estate data company. This represents about 22.5% of the mortgaged properties in the country.
Hardly encouraging, but in this market and economy, I guess we need to look for a silver lining to find light at the end of the tunnel.
Also, according to this article, “negative equity” has been pointed at to be one of the biggest reasons for the continued slow-down in the housing sector and the economy in general. Nevada has as much as two-thirds of its mortgaged properties upside-down. Other states with significant underwater mortgaged properties are Arizona, Florida, Michigan, and of course, California.
When adding in properties with “near negative equity” the 22.5% increases to over 27%! As the market continues to slow down in a number of markets, we could possibly see an additional few percent of mortgaged properties, which could translate to even more negative equity and thus further erode homeowner wealth nationwide.
In my opinion, what needs to happen is we need to find ways to become more proactive in preventing foreclosures and finding ways to incentivize correct behavior instead of cleaning up the messes left afterwards. Too little, too late? Yeah, probably so. Hindsight is 20/20. Unless you’re the gover……