Percent of homes underwater on their mortgages

Click on image for a bigger graph.

Calculated Riskhas published this nice little chart that shows which states have the greatest amounts of homeowners that have underwater mortgages.

Homes with negative equity are "underwater"; essentially it means the loan balance is greater than what the home is work. This is a problem, because it raises the risk of foreclosure and strategic walk-aways.

States such as Nevada, Arizona, Florida and California and Michigan have large amounts of homes that are underwater. Some states in the middle of the country--such as Oklahoma and North Dakota have the largest percentage of homes with positive owners' equity.

1H-2009 saw 1.5 million homes start the foreclosure process

According to CNN, during the first half of 2009 1.5 million homes began the trek down the foreclosure process---representing 1 in every 89 households.

CNN which used data provided by realtyTrac broke down the data to show the 10 states where the most mortgage foreclosure activity is taking place. Here's the data:

1. Nevada 1 in every 16 houses in foreclosure
2. Arizona 1 in every 30
3. Florida 1 in every 33
4. California 1 in 34 houses
5. Utah 1 in 69
6. Georgia 1 in 70
7. Michigan 1 in 74
8. Illinois 1 in 76
9. Idaho 1 in 79
10. Colorado 1 in 80
11. Ohio 1 in every 86

Almost 1 in 9 Michigan Mortgages are Delinquent

According to the Detroit Free Press more than 1 in 10 Michigan home owners are 30 days (or more) delinquent on their mortgages and almost 1 in 25 Michigan mortgages are in foreclosure as of Q4-2008.

The story references a recent Mortgage Bankers Association report that cites 8.6% of all U.S. mortgages are delinquent in the U.S. (compared to 11.1% in Michigan) and 3.7% of Michigan's mortgages are in foreclosure.

The report also stated:

... five states – California, Florida, Nevada, Arizona and Michigan – continue to dominate the delinquency numbers. Yet five other states – Louisiana, New York, Georgia, Texas and Mississippi – had the sharpest increases last quarter in loans 90 days or more late, which are signs that the recession’s impact is spreading, he said.

Times are tough in Michigan as demand for durable goods continues to decline and the state saw 11.6% unemployment in January, 2009.

20% of homes with a mortgage are under-water

Data released today shows that 20% of home owners with a mortgage owe more than what their homes are currently worth.

This amounts to over 8 million residential properties that have negative equity.

The article goes on to state:

Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio remained the most stressed states, with 62 percent of underwater borrowers and just 41 percent of mortgages.

You can read the rest of the article here

You can be sure that as long as states like California, Florida, Georgia, Michigan and Ohio continue to see unemployment rates rise, delinquency rates on mortgages will go up and with many of those home-owners in a negative equity situation on their loans, and significant amounts of resets yet to come---the collapse in housing prices will continue for a couple of more years.

Nevada leads the nation in the highest rate of houses in foreclosure

Realtytrac.com today issued a report that included data on the percentage of housing units in foreclosure. Overall, the United States has 1.84% of home mortgages in foreclosure---That is up 81% from 2007.

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The Top-10 worst states for foreclosure rates are:

1. Nevada--7.3%
2. Florida--4.5%
3. Arizona--4.5%
4. California--4.0%
5. Colorado--2.4%
6. Michigan--2.4%
7. Ohio--2.3%
8. Georgia--2.2%
9. Illinois--1.9%
10. New Jersey--1.8%
    

The states with the highest rates of non-owner occupied sub-prime housing.

The states with the highest rates of non-owner occupied sub-prime housing in the United States are Washington DC, Hawaii, Ohio, Indiana, Georgia, North Carolina, Florida, Michigan and Wisconsin.



These figures are important because an investor is far more likely to walk away from a property that is underwater and not generating income than what would be expected from an owner-occupied property.