Posted in Financial News, Foreclosure, Mortgage Rates, Underwater Mortgages May 9, 2011
A new report from Zillow Inc. revealed on Sunday that the number of U.S. homeowners with underwater mortgages has increased to 28 percent. The increase occurred in the first quarter of 2011 as a result of the housing market experiencing massive drops in property values.
Home Prices Dropped 8.2 Percent
The report found that home prices dropped 8.2 percent over the past 12 months, marking a low not seen since 2008. In fact, it was reported last week that home prices had double dipped.
Last quarter, underwater mortgages were at 27 percent, but after home prices dropped 3 percent in the first quarter, more homeowners found their homes had fallen underwater, meaning they owed more on their mortgages than their homes were worth.
Values Expected to Drop Into 2012
Zillow predicts more homes will likely fall underwater as a result of continually decreasing home prices his year. The company said prices will probably fall 9 percent. In fact, prices are not expected to find their bottom until sometime in 2012.
One reason for the drop in home values is foreclosures, which are expected to continue for the remainder of the year. Also, unemployment and uncertainty in the economy are discouraging many prospective home buyers.
Some Cities Have Shockingly High Number of Underwater Mortgages
While the U.S. underwater mortgage percentage is high, some cities are in even worse circumstances. The following cities have the highest percentage of underwater mortgages in the country:
- Las Vegas: 85 percent
- Reno: 73 percent
- Phoenix: 68 percent
- Modesto: 60 percent
- Tampa: 60 percent
However, despite all of the bad news, property values have increased slightly in three areas: Fort Myers, Florida gained 2.4 percent, Champaign-Urbana, Illinois rose 0.8 percent and Honolulu saw an increase of 0.3 percent.
Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg, and the Tampa Bay area.