On the national level, it seems that if you purchased a home, whether new or a resale, in the past five years, there’s a good chance that you now owe more than it’s worth. In fact, the chance of homeowners who purchased since 2003 being “upside down” or “underwater” is about one-in-three.
A recent report from Zillow.com, a Seattle-based valuation firm, concluded that nationwide median home values have plummeted to about the level of 2004. Since at the time and until about August of 2007 many mortgages were 0% down or 5% or less down, new buyers were looking to gain immediate equity as homes were increasing in value very quickly. In fact, in some markets, our own Los Angeles County included, many areas were increasing at a frenzied pace as 25% and 30% per year was not uncommon. With the crash of the sub-prime market and the subsequent retrenching by lenders, our market has now decreased in value by about 26% county-wide.
Of course, many markets in California are faring much worse. In Stockton, for instance, 95% of those who bought since 2003 are upside down since median home vaues have sunk over 38% in the past year. This is comparable to some parts of Los Angeles, San Bernardino and Riverside Counties. The Antelope Valley, and Lancaster, for instance, have lost more than 50% of value, Watts has sunk 50% and Apple Valley and Hesperia areas are down more than 30% as well. The City of San Bernardino is another disaster zone where people are really hurting as home values nosedive.
Some areas of the country are now coming out of the downward spiral or never entered into it at all. The Seattle-Tacoma area, for instance, according to Zillow, has actually increased 8% since 2003 though values fell 7.3% last year to a median of over $355,000. Many markets in Texas, including Austin and Houston, are in the doldrums sales-wise, but values have not sunk significantly. Dallas values are actually rising as are those in San Antonio. The explanation? Values in Texas never skyrocketed to the stratosphere, but beginning in the affordable range maintain steady upticks year after year.
The worst-hit places in the US? Some of the worst in California, besides Stockton include our own Inland Empire and San Diego. Las Vegas and Phoenix have both been hard hit along with south Florida, though Ft. Myers on the Gulf Coast is showing signs of life. Of course, Michigan has been on life-support for several years with the exception of a few areas like Ann Arbor.
When will all this be over? Don’t know. Can’t say. Congress has already taken action in the Housing and Economic Stimulus Act of 2008 as mentioned in a previous post. I will be posting more about this humongous bill which I am still sifting through.