The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.
About 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to a report released Tuesday by housing data firm CoreLogic.
That’s up from 22.5 percent, or 10.8 million households, in the July-September quarter.
The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure.
Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.
Roughly two-thirds of homeowners in Nevada with a mortgage had negative home equity, the worst in the country. Arizona, Florida, Michigan and California were next, with up to 50 percent of homeowners with mortgages in those states underwater.
In addition to the more than 11 million households that are underwater, another 2.4 million homeowners are nearing that point.The slide in home prices began stabilizing last year.
But prices are expected to continue falling in many markets because of still-high levels of foreclosure and unemployment. That means homes purchased at the height of the real estate boom are unlikely to recover lost value for years.
Many banks are requiring home buyers to put as much as 20 percent of a home’s value as down payment and the Obama administration is pushing for a 10 percent down payment requirement on all conventional loans guaranteed by the ailing mortgage giants Fannie Mae and Freddie Mac.
● Nevada, at 118 percent, had the highest ratio. Information from the AJC.
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