You bought at the peak of the market. You put next to nothing down. (Maybe you even took out one of those 105% LTV loans to cover closing costs.) Now prices are falling, falling, falling, and you are underwater on your mortgage. Deep underwater, where the strange sea creatures dwell.
If it’s any comfort, you are not alone. Here’s what Zillow.com, the real estate website, says today:
“Of homeowners nationwide who purchased when U.S. home values peaked in 2006, one out of every two (51.6%) now owes more on their mortgage than their home is currently worth.”
You’re in better shape if you bought before or after the 2006 peak in prices. Here’s the percentage of homes that are underwater on their mortgages based on when they were bought, according to Zillow:
Las Vegas may look dry, but from the point of view of homeowners, it’s deep underwater. Zillow says that buyers in 2006 posted a median downpayment of just 2%, and since then, home values have fallen 25 percent year-over-year, so 89.9% of homeowners now owe more than their home is worth.
Stockton, Calif., is worse: 95.8%. No wonder it’s known (unofficially of course) as the Foreclosure Capital of the U.S.A.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.