One third of homeowners in negative equity

Zillow released a report today reporting at least one third of new home owners that bought in the last five years owe more then their homes are worth. Nearly one in foue home sold last year were sold at a loss. Not surprising news considering so many people bought homes when the market was high while financing 90 to 100 percent of the homes cost.


California is being hit hardest, with the number of homeowners whose mortgage debts exceeded the values of their properties topping 90 percent in some areas. During Q2 2008 foreclosure activity in California increased 19 percent over Q1 2008. About one in every 65 households filed foreclosure during this period.

Arizona posted the nation's third highest foreclosure filing with a 36 percent increase in filings over Q1 2008 and close to four times the number reported for Q2 2007. This amounts to about one in every 70 Arizona homes filing foreclosure. The Phoenix metro area reported one in every 51 homes received a foreclosure filing during this period.

Who's to blame? Excited home buyers who didn't read all the fine print or exaggerated their income on loan applications, or the lenders themselves that approved any and everyone for homes they really couldn't afford? I personally don't think we can point the finger at any one cause for this fiasco. All we can say is that foreclosure filings will likely increase and sales prices will drop through the rest of the year. Lending standards are getting tighter so fewer buyers can obtain loans without large down payments, which isn't necessarily a bad thing. If we hadn't seen so much creative financing being used in the past few years this problem wouldn't be as extreme as it is now.

One Third of New Owners Owe More Than House Is Worth