Friday, March 6, 2009

1 in 5 Underwater, Water Still Rising

My question is always this: what happens when everyone is underwater? What will we do then? That time is coming soon. The percentages are already mind-boggling. The problem began with housing, and the solution has to start there as well.

More American homeowners are drowning in debt, according to a new research report. As of the end of 2008:

Because home prices continue to drop across most of the country, the mortgage debt on about 20% of all U.S. single-family homes exceeded the estimated current value of those properties as of Dec. 31, says First American CoreLogic, a real estate information firm based in Santa Ana, Calif.

That proportion will rise to 25% of single-family homes if prices fall another 5%, the firm said.

The problem is most acute in Nevada, where the percentage is 55%, followed by Michigan (40%), Arizona (32%), Florida (30%) and California (30%).

Stripping out those five hard-hit states, the national percentage is about 14%. In New York State, the tally is just 4.7%.

Being underwater isn’t a huge problem for those who can afford their mortgage payments and don’t need to move any time soon. But it can make it difficult or impossible to refinance or sell a home.

And it causes some homeowners to wonder whether they would be better off walking away from their homes and renting something similar for a much smaller monthly outlay.

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