As the housing market collapsed and home prices plummeted, Americans lost vast amounts of wealth. Homeowners in some cities were hit particularly hard — Las Vegas and Orlando, Fla., are now effectively “underwater,” with more mortgage debt than property value over all.

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Source:
Gloom Grips Consumers, and It May Be Home Prices
NYT, October 18, 2011

Category: Economy, 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.

19 Responses to “What Cities’ Homeowners Are the Most Underwater?”

  1. ellwood2011 says:

    Actually this is a lot better than I would have expected, to see average net equity in so many places. I live near Jacksonville, and things have been picking up all summer. Back in June, the NYT did a story on one of the towns in the area and made it a poster child for the housing slump. But things have turned around significantly since then, which you can verify at a blog maintained by one of the local realtors, at gotoby.com.

  2. BennyProfane says:

    I’m skeptical of those numbers. I’m guessing that Vegas and Orlando are closer to 150% and more.

    Does this include HELOCs?

  3. CTB says:

    This is total mortgage debt / total property values. A good portion of property owners have no debt at all (1/3?). I would guess any number over 66 or so is bad.

  4. Irwin Fletcher says:

    Here is some ground level data.

    I live in a major city in the southeast.
    A $700,000 home in 07 now is listed for $500,000. (29% decrease).
    This same home was listed for $529,000 two months ago.
    Prices are still falling.
    Plus, credit is very tight and mortgages are hard to come by.

  5. BennyProfane says:

    Well, one must look at the right side of that chart as the real culprit. Average property value in SF is almost 800 grand? So, that means one must have an income of about 300000 to even think of buying a home there. Nassau/Sufflolk? about 225000. Now, I know that people are doing well in both areas, but, those can’t be the average household incomes. What, did some of these locales turn into Aspen while weren’t looking?
    The reset to sane market pricing in some areas haven’t even started yet. Expect those numbers to be lower next Spring now that Fannie/Freddie jumbo loan limits just shrunk, which, ironically, will lead to headlines that the median resale price has risen as those MacMansions come on the market for whatever.

  6. Long term says:

    Option #1: House prices fall and people/banks take haircuts

    Option #2: We go sideways for 10+ years

    I predict long hair.

  7. NoKidding says:

    Top 10 bad and top 3 good. Source = NYTimes.

    Why do I suspect an editorial decision to shorten the top 10 good to a top 3 good involved the name of the particular state that would dominate the remainder of the top 10 good?

    ~~~

    BR: Are there even 3 good states?

  8. mathman says:

    more signs of the times:

    http://news.yahoo.com/blogs/philadelphia/seeking-quick-cash-thieves-steal-x-ray-film-232324103.html?bouchon=504,pa

    Here in PA our state capital has filed for bankruptcy (where’s that leave us – do we all have to move out of the state?): http://www.timesleader.com/news/Bankruptcy-judge-sets-Harrisburg-arguments-for-November-.html

    see you tonight (here)

  9. hunterthompson901 says:

    Depending on the market, only about 1/3 of all home owners have a mortgage at all. Nationally, close to 30% of homes are underwater. Areas like Las Vegas (-60% since peak) and Phoenix (-50% since peak) have suffered far worse as 80%-90% of all homes with a mortgage are underwater. As the numbers above indicate, most of these households are more than 25% underwater, breaching an important threshold where default rates begin to skyrocket. Not only this, but if these home value continues to depreciate just 5%, another wave of households will become underwater, due to the fact that homes have so little equity as it is.

    As this happens, default rates increase. As default rates increase, foreclosures increase. When foreclosures increase, comp prices fall due to the bank’s willingness to take haircuts on distressed property sales. As prices decrease, home values go further underwater, making default rates increase. Viscous negative feedback cycle until property values align with household income at the historical 2.2 ratio. Compare that to the ratio in San Francisco!

  10. econimonium says:

    Actually I think the math here is a bit flawed as CTB says. To get a sense of really where it is you’d have to take the total of all the property with mortgages, not all the property. It’s impossible to have an “underwater” property with no mortgage on it whatsoever.

    So if 1/3 of property is paid off totally, (the question being the value) this chart is actually very, very optimistic if the total mortgage debt was just compared against the total property value of all property in the area. It’s not clear here if that was the methodology but, if it isn’t, it’s much worse than this.

  11. 873450 says:

    Americans can take comfort knowing our government’s initial, unprecedented bailout and subsequently ongoing, equally unprecedented defense of the banking sector is enabling 1% of their fellow citizens to escape suffering that crushing loss of wealth and permanently reduced living standard inflicted on everyone else. The 99% can live vicariously through them for a generation or two, maybe less if trickle-down kicks in sooner.

  12. gordo365 says:

    So you bought a house that cost $120k to build – in a subdivision next to open desert in Phoenix or LasVegas – for say $450k. Now it and all your neighbor’s houses are only going for $169k. Sucks.

  13. Robespierre says:

    I was wondering when this was going to happen:
    “The Massachusetts Supreme Judicial Court just handed down a second major mortgage foreclosure ruling, Bevilacqua v. Rodriguez. The case was an Ibanez follow-up dealing with the rights of a purchaser at an invalid foreclosure sale. ”
    http://www.creditslips.org/creditslips/

    This may be good for home builders since it will make any home purchaser feel safer about title…

  14. budhak0n says:

    Ok , enough. I’m going to solve your entire “housing” crisis once and for all. And after tonight, I don’t want to hear anymore of your incessant whining . ( God Knows we’re NEVER going to reach that point).

    Who cares what you spent on your house? What people always forget to factor into all your postulations and wacked out theories about how this guy or gal screwed you, or that business stuck it to you is THIS.

    When it comes to houses, NOT EVERYONE BORROWS MONEY. It’s very convenient how we have this whole contingent of people bemoaning their “equity” or loss of equity. Who gives a hoot … really.

    If you barely put any money down and housing prices dropped , YOU HAD NO EQUITY.

    You know who has equity? The people who owned their homes and didn’t borrow at all.

    Now shut all your mouths and get back to your tents. We need another round of entertainment.

    Frankly some of the general objectives of the Occupy movement are ideas that were first sounded off by myself in 2008 … When it could have made a difference.

    Now you’ve made this absolute mess where everybody thinks they got shafted, and nobody knows how to get out of it.

    I was talking to somebody who was hired to supposedly “sell” one of these properties in a southern state. I was informed that the wonderful tenants ( ie the deadbeats who refused to pay their mortgage payments) took EVERYTHING out of it. Not just the appliances. The cabinets, the countertops, etc.

    Now somebody answer this. How in the world are you supposed to get a family into that place that can actually make the payments?

    People have gone insane. The internet has made every Tom Dick and Harry think they are involved in daily activity that affects GLOBAL FINANCE. You’ve all lost your minds.

  15. patfla says:

    Interesting that the most expensive markets have the highest equity/value ratios. It may be that the top .1% (or is it .001%) have all the political power but it’s apparently still good to be, say, in the top 5%.

    I wanted to figure what % of all American households are underwater on their mortgages and here are the assumptions and calculations I did elsewhere on the web a couple of months ago:

    % Am households that own a home: 65%
    % of the above that own their home free and clear: 33%
    % of existing mortgages that are underwater: 25%

    So that would make the calculations (in emacs prefix calculation mode):

    home ownership without mortgage
    (* .65 .33)
    0.21450000000000002

    home ownership with mortgage
    (- .65 .2145)
    0.4355

    % of Am households underwater
    (* .25 .4355)
    0.108875

    I reserve my right to be mistaken at any point in time.

  16. dsawy says:

    As to San Francisco property values:

    http://www.trulia.com/home_prices/California/San_Francisco-heat_map/

    In the last 15 years, more and more people from Silicon Valley have taken their stock option gains and purchased homes in SF, driving the prices up so high that the middle class and parents with children are being effectively driven out of the city. SF housing values, like those in Palo Alto, Burlingame, Los Altos and other places have been a function of Silicon Valley comp packages since about 1995. For those living in SF, the commute to the Valley is pretty easy: Just get on I-280 and head south. No bridges to cross, no tolls, no nothin’. Just a 25 to 45 minute drive, depending on where in the valley you work.

    About Las Vegas: The situation is as bad as represented or worse. One of the things that has kept homes from gaining sustainable appreciation in value in Vegas is Harry Reid’s back-room maneuvers with the BLM to cut more land loose for developers. The market in Vegas has been effectively over-supplied with housing for years thanks to Reid and his developer buddies.

  17. Greg0658 says:

    dsawy – “Vegas has been effectively over-supplied with housing for years thanks to Reid and his developer buddies” (purportedly) .. maybe to fund the real wars – provide jobs – spike up manufacturing – pay for the electioneering (purportedly)
    had to go find this I just read:
    Nassim Taleb via Victor – “ask not why he/she is poor or rich; instead ask why he/she is not poorer or richer” .. or doing things for ITs

  18. Greg0658 says:

    patfla I spent some time understanding your figure’g .. and I’ll typeset them (abit):

    home ownership wo/mortgage 21.4% + home ownership w/abovewater mortgage 32.6% + households underwater 10.9% + renters & homeless 35.1% = 100%

    and to purport some .. our not seventeen nation states but 50 individual states (that can’t print money to bail themselves out) have what law on their side ?A property taxes &or sales taxes

  19. patfla says:

    Thanks Georg0658 – that was a logical next step and the numbers are, again, interesting.

    Of course, those numbers will change as assumptions change. Is 25% still an approximately accurate number for mortgages underwater? I think I read recently that with a given not-impossible scenario, 50% of mortgages would be underwater. The major factor there, I seem to remember, would be another major leg down.