Nevada's 70% Underwater Mortgages Lead Negative Equity Trend
Nearly one in four mortgages nationwide was in negative equity status as Dec. 31, 2009, up 600,000 from third quarter, according to a report released yesterday by First American CoreLogic.
Nevada credit unions are struggling with the nation's worst equity situation, as 70% of all borrowers owe more than their homes are worth. Arizona follows with 51%, Florida with 48%, Michigan with 39%, and California rounds out the top five with 35% of all mortgages underwater.
Nevada's statewide loan-to-value ratio is 123%, underwater nearly $25 billion. Arizona and Florida follow with 95% and 91% LTV respectively. Georgia is next at 80%.
News that California's housing market is stabilizing showed in equity numbers; compared to other high negative-equity states, California had the smallest increase during the fourth quarter, only 0.4%. Nevada, Georgia and Arizona experienced the largest increases.
"Negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners," said Mark Fleming, chief economist with First American CoreLogic. Fleming said because he expects home prices to only increase slightly during 2010, negative equity will remain a "dominant issue" in mortgage markets for "some time."