Decreasing home values put record number of home loans under water

Dropping house values has led to a record amount of home loans being underwater. The value of houses nationwide has been steadily sliding downward as foreclosures, unemployment and tight credit take a toll on real estate. Values could continue to fall.

Over a quarter of home home loans estimated to be underwater

The recession has caused home prices to go down. There has been a higher unemployment, fewer homes sold and more foreclosures. This has caused an even lower home value recently. It’s called being under water on a mortgage when more money is owed on a home than it’s worth. Currently, 27 percent of American homeowners face this issue, Bloomberg reports. Zillow is a real estate information company that explained that right now, 15 million home loans are underwater. In the past year, house prices are estimated to have dropped 6 percent. Just since September 2010 they have gone down 3 percent. A 5 percent decline in 2011 is anticipated. They are not going up just yet.

Deceptive decline in foreclosures

Foreclosure activity has been closely viewed over the past year in the hopes that a slowing rate of foreclosure would mean a real estate industry close to recovering. The crisis is not over yet, says CNN. The slowing rate of foreclosures in Jan does not mean that. Before banks would foreclose on homes, they wouldn't review paperwork first, which was called the "robo-signing" scandal. This is why there have been fewer foreclosures occurring lately. The amount of homes and private loans foreclosed on will likely increase once the backlog of foreclosure cases in courts and at loan providers is reduced.

Locations having trouble with foreclosures

Areas where real estate values are the highest are nevertheless plagued by high foreclosure and rates of negative equity. Nevada, AZ and CA nevertheless lead the nation in foreclosure-affected states. Florida, though, has started to improve, falling to ninth place nationally in foreclosure rates.

Citations

Bloomberg

bloomberg.com/news/2011-02-09/home-price-decline-leaves-27-of-u-s-owners-underwater-on-loans.html

CNN

http://money.cnn.com/2011/02/10/real_estate/foreclosure_filings_fall/