Negative Equity Increase in the U.S. Housing Market

March 07, 2012 / Russell Legato, Residential Property Analyst

Real estate experts conclude that close to a fourth of the residential properties in the U.S. Housing Market had a negative equity mortgage on the home. This exceeds the one fifth increase reported in the third quarter in 2011. In addition, under five percent equity was held by two and a half million homeowners in the last quarter. The term for this is near negative equity.

Negative Equity Increase in the U.S. Housing Market

A negative equity is one in which the owner owes more on the mortgage than the home is worth. It is due to a declining value, an increased mortgage debt or a combination of both. The share of negative equity properties rose in 2011. That elevated level of negative equity, combined with the inability to pay is attributable to the rate of foreclosure.

The Q4 2011 negative equity in the state of Nevada was almost two thirds of all mortgaged property. This was the state with the highest percentage of negative equity. In second place was Arizona with close to half. Following were Florida, Michigan at slightly over one third and Georgia at exactly one third.

Georgia has been one of the five leaders for two consecutive quarters. California is currently in third place at thirty percent. California was one of the top five since 2009. Each of the states in the top five averaged a negative equity share of over forty percent. This far exceeds that of any of the remaining states, which have slightly more than fifteen percent equity share on average.

There are considerably more than ten million homeowners with negative equity in the U.S. Housing Market. They find themselves in this dilemma of owing more on their homes than the properties are worth. In the current market, there does not seem to be any immediate solution available to them.

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