Fewer US owners of mortgaged homes underwater

Source : Business Times – 10 Nov 2009

The number of US homeowners who owe more than their properties are worth fell in the third quarter as values stabilised and some homes were lost to foreclosure, Zillow.com said.

About 21 per cent of owners of mortgaged homes were underwater, down from 23 per cent in the second quarter, the Seattle-based property data provider said yesterday in a report.

‘The decline in the percentage of homeowners with negative equity is a positive sign, and is directly attributable to the stabilisation of home values from the second quarter to the third,’ Zillow chief economist Stan Humphries said in a statement.

‘It is also attributable to many homeowners who were previously underwater on their mortgage losing their homes to foreclosure.’

US foreclosure filings climbed to 937,840 in the third quarter, a 23 per cent increase from a year earlier, Irvine, California-based RealtyTrac Inc said on Oct 15. Zillow estimated that the median value of single-family houses, condominiums and cooperative apartments declined 6.9 per cent in the same period.

The rate of decline slowed, as home values dropped 0.4 per cent from the second quarter to a median of US$190,400, Zillow said.

Bank sales of foreclosed properties accounted for 21 per cent of all US home sales in September, Zillow said. Such transactions made up 74 per cent of sales in Merced, California; 69 per cent in Stockton, California; and 68 per cent in the Las Vegas area. About 27 per cent of homes sold nationwide went for less than the sellers originally paid for them, Zillow said.

Rising foreclosures that began with defaults on sub-prime mortgages, a global recession and increasing unemployment have hurt the US housing market. Unemployment surged to a 26-year high of 10.2 per cent last month, the Labor Department said last week. Payrolls fell by 190,000 workers. Housing will hit bottom by March 2010, with lower-priced properties recovering value more quickly than expensive homes, First American CoreLogic said last month.