No, not flooding — underwater in terms of owing more than the home is worth:

“Twenty percent of Bay Area homeowners owe more on their mortgages than their homes are worth, according to a study being released today. This dubious distinction has entered the American lexicon as an all-too-familiar term – being underwater.

As home values continue to plunge, the real estate valuation service said that 20.76 percent of all homes in the nine-county Bay Area are underwater. The rate is much higher than the national average of 1 in 7 homes, or 14.3 percent. That’s because the Bay Area – like most of California – was a classic bubble market, where buyers in recent years paid overinflated prices for homes that now are rapidly losing value in the market downturn.”

The highlight of the article are these amazing charts via San Francisco Chronicle:


Amazing . . .


Bay Area homeowners owe more than home’s worth
Carolyn Said
San Francisco Chronicle, Wednesday, November 12, 2008

Category: Credit, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “Underwater Homes in Bay Area”

  1. jason says:

    Fascinating graphic. I live in the Bay Area and here is what stands out to me.

    1. The Black Areas (40-60%) – are all in BFE (Bum F#$@ Egypt) places no one would want to live unless forced to by the high prices in more desirable areas. Some of these places are 2 hours commutes from the job centers. The anomalies are San Pablo (oil refinaries for neighbors) parts of Union City, Hayward, and San Jose (all undesirable places in my view).

    2. All the desirable areas with good schools and location are YellowOrange (0-10).

    3. Everything else falls neatly in between on the underwater spectrum and in desirability.

    Disclosure I am in a 10-20 area but am far from underwater.

  2. bhupi says:

    If you bought your home to live in rather than to use as a casino, then big deal. Keep living in it and try to find some enjoyment in life. If you bought your house to flip, then win some lose some. You lose.

  3. jmborchers says:

    Oil has lost almost all it’s gains. Market going to get bullish I believe.

  4. Mannwich says:

    Careful with those toes. This not your father’s stock market and economy.

    We’ll see if we get a bounce later (in this crazy market, who knows?) but it’s looking like bye-bye rally to me. The grind lower continues…..

  5. Gene says:

    Regarding home prices: sometimes they decrease in value. Having worked “out there” for years for a major semi company, I’m not surprised, or sympathetic.

  6. jmborchers says:

    Put yourself in win-win trading positions as much as possible. If the market crashes I have limited losses because of the amount of leverage I used. If the market crashes I still plan on buying more shares in the panic. Worst case flat and option burn or slightly down. I’m fine with that as well.

    As soon as the panic we are going down in flames subsides here we should be okay for more ralley.

  7. Downtown Vancouver Realtor says:


    Absolutely fascinating chart! I am a Downtown Vancouver Realtor and recently had my honeymoon in San Francisco (What an amazing place!) and was wondering about the real estate market there!

  8. Winston Munn says:

    jmborchers Says: “Oil has lost almost all it’s gains. Market going to get bullish I believe.”

    There is another take on the change in oil prices. From AP:

    “The only silver lining is gasoline. Consumers are using the money they are saving at the gas pump to try to rebuild their savings to the extent they can, especially given the wealth they’ve lost in their homes and in the stock market.”

    Saving, paying off debt, entrenching…..these are not people willing to party with credit cards. Without the consumer, where is recovery?

  9. jmborchers says:

    It’s right in front of us Mr. Munn

  10. Mannwich says:

    The “recovery” is well in front of us, I’m afraid. Try 2010, maybe late 2009. Maybe.

  11. jmborchers says:

    Man it’s so close in front no one can see it.

  12. jmborchers says:

    Oil going to break a 2-4 yr low soon. Maybe that causes some concern but what should be done with this is buy the market.

  13. bri says:

    i worked up there in my wirehouse days, and some of those areas are no joke.

    while i agree with jason’s relative desirability analysis, still this is the one part of the country that still makes stuff people want: iphones, internet ads, solar panels, cancer drugs, wine, more wine, etc. and where the jobs are relatively the safest.

    i’m looking at Marin, San Mateo and Santa Clara @ +10%.

    these are pretty desirable areas, maybe not by SF/ Los Altos standards, but by mortal human standards, this is best of america.


  14. Pool Shark says:


    Larry Kudlow; is that you?

  15. Winston Munn says:


    You obviously have a positive bias, while I have an admitedly negative bias. But when analyzing the data, I wonder why – if your hypothesis is correct – didn’t the lower gasoline and oil prices cause a surge in consumer confidence? Consumer confidence is still extemely low.

    I suggest that the hundreds of dollars in “walking around” money that a drop in gasoline prices creates in no way compensates for the billions of dollars lost through home price devaluation and the millions of dollars that disappeared along with the 750,000 plus jobs lost this year.

    It is jobs, not gasoline, that powers the ecomonic engine.

  16. Whammer says:

    I can second what Jason said. Solano County was just completely insane. Paying a ton of money to live there didn’t make any sense, it’s too far from everything. Similar things have been going on in other, further-out areas — Modesto, Fresno, etc.

    The other thing that is amazing is how many houses are being sold at a loss, especially those that were bought in the last 12 months. Actually, now that I think of it, most of those should be looking at losses.

    My zip code has 0.8% underwater, which doesn’t surprise me too much. Lots of people who have owned their houses for a long time, so they don’t owe too much on them. Our LTV on our house is probably 30% or less.

  17. jason says:


    I am not trying to make a judgment on these areas.

    The general point is that the more well-to-do areas are doing best and gradually as you move down the desirability scale there is a greater percentage of homes under water. The 40-60 areas are places that most do not want to live but choose to as the housing market ran away from them. It is not that they are not nice areas, some are okay but that they are suburban tract homes, chain stores, the same as any other cookie cutter community anywhere in the US. If you want that life then move somewhere that home prices are reasonable, it always seemed pointless to pay Bay Area prices and live somewhere that is indistinguishable from suburban Texas (I lived there).

    40-60 = Solano County (BFE), Santa Rosa (BFE – this is not the Bay Area), and the strip mall, car lot areas of Hayward Union City and then Pittsburgh and Antioch (BFE & Industrial)

    30-40 = Overbuilt areas of Contra Costa, some very, very nice but massively overbuilt mainly between Pleasanton and Livermore. Some areas around Santa Rosa (BFE), and the last resort areas of the East Bay, such as Oakland (not the hills), San Leandro, Hayward and Union City.

    20-30 = Slightly better areas but still decidely blue collar (in the traditional sense). Less desirable areas Richmond (Murder Capital), San Pablo (Refineries), Daly City, San Bruno (Airport), Martinez, Concord, Redwood City and the overbuilt areas of Napa and Sonoma.

    10-20 = These are all the middle-class to upper middles class areas, high desirable areas but not in the City: Walnut Creek, Danville, City of Alameda, Lafayette, San Ramon, Los Gatos, San Rafeal.

    0-10 = High End areas: San Francisco better neighborhoods, Berkeley Hills, Orinda, Piedmont, Los Altos, Hillsbourgh, Marin, Palo Alto, elite areas of Napa and Sonoma.

  18. jason says:

    Added thought: I am aware of only one foreclosure in my town. I am sure there are more but I never see or hear anything and I have tons of friends that are Real Estate Agents or Brokers, one of whom specializes in foreclosures.

    Underwater, anyone who bought in the last 12-18 months. I know my neighbor is at least a $100,000 under water on his mortgage, he moved in at the peak (job relocation), most of us on the street have been here awhile and are in no trouble. But if I had to guess 10% of the houses changed hands in those 12-18 months.

  19. DP says:

    @Bri – I’ve seen this same this here in Florida (Orlando). Houses in well established neighborhoods where people have lived in them for years are holding up their value much better than the newer houses, and tend to be on the market for less time.

    During the housing boom, builders started to build further and further out and people were entering lotteries to buy.

    One of my friends lives in a 4000ft square box that looks exactly like all the other 4000ft boxes in his neighborhood (except his actually has someone living in it), miles from anywhere and was on the market for over a year without a single visitor. Gas prices were blamed at the time – “who wants to live 30 miles away from civilisation when gas is over 4 bucks a gallon?” – but gas coming down doesn’t seem to have helped. In the meantime, the house across the road from us just sold after 3 weeks on the market for 14% less then it was purchased for in 2005. 14% loss on a house is hardly a reason to celebrate, but relative to the rest of the market it held in well.

    The house we bought in 2000 doubled and we sold in 2005 to buy our current house. Overall, it’s a wash and the amount we are “underwater” in this house is about the same as the profit on the hold house. It *really* sucks for first time buyers, but what the hell are first time buyers doing in 600k houses? I have no mortgage, but apparently I’m going to be helping a lot of other folks pay theirs. In the meantime, I drive a camry with 110k miles on it while the underwater houses have HELOC financed hummers and escalades parked outside. Go figure.

  20. bri says:

    no jason, i’m completely agreeing with you that the elite areas are like another planet altogether, had clients in Atherton/ Los Altos, and i was like their dog walker (no offense to dog walkers).

    and of course, the least desirable spots are getting hit hardest, just like everywhere else in the country.

    my point was that even in “middle class” areas like Mountain View, the “blue collar” engineers rolled around w/ a million plus in the bank, and were still very middle class.

    in other words, this is not your average place, nor your average wealth destruction.

    still, the most beautiful place to live in N. America. lucky you.

  21. Pat G. says:

    News Flash: FDIC to create new facility to divvy up losses with banks on revalued mortgages.

  22. rmasand says:

    This analysis is already outdated. In the last few days a number of Silicon Valley companies – Applied Materials, Cadence and Sun – have announced significant layoffs. We were on the edge of a precipice. Over the edge now.

  23. AGG says:

    Th reason the market is going down today is obvious:
    All those people that stopped smoking can’t push back and relax. They keep trying to get a fix from gains when what they really crave is nicotene. Perhaps the VIX should have an anti hedonics adjustment because of the smoking ban. Buy a pack if you want the market to go up. Light up a Lucky, it’s light up time. Relax and be happy, it’s light up time. For the taste that you like, light up a Lucky Strike, relax it’s iron lung time. Take your choice; rich with cancer or poor without.

  24. Gabriel says:

    But today PPT may step in, and provide some extra push – they may have attempted to kick start the roll yesterday too. I know, I know, PPT is a myth.

  25. jfp says:

    I live in Palo Alto, and have been looking at houses to buy for the last couple of years. Since August, the number of houses on the market has gone way up, transactions are few, and the prices are coming down in $50,000 increments weekly. It used to be that every house got multiple offers. Now, when you go to an open house, the agents are openly suggesting bidding below the asking price. Based on what I am seeing, anyone who bought in Palo Alto in the last year and a half is underwater. It’s just not showing up yet, because there aren’t that many transactions.

  26. Jojo99 says:

    Here’s a list of foreclosures in the 9 county SF Bay Area