States with the Most Homes Underwater

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5. Michigan
>Pct. mortgages underwater: 35.6%
>Total property value: $193.15 billion (18th highest)
>Mortgage debt outstanding: $161.24 billion (18th highest)
>Pct. mortgages 90+ days delinquent: 5.5% (24th lowest)

Despite more than one in three homes with negative equity, there are some positive signs in Michigan. The state was the only one on the list with rising home prices in 2011, with prices increasing a modest 1.7%. Meanwhile, Michigan’s unemployment rate of 8.5% ranked 12th in the U.S. in May. This is quite the improvement from the long period — until June 2010 — that Michigan held the dubious title of having the highest unemployment rate in the nation, topping out at more than 15% at the height of the recession.

4. Georgia
>Pct. mortgages underwater: 37.2%
>Total property value: $293.01 billion (15th highest)
>Mortgage debt outstanding: $246.52 billion (11th highest)
>Pct. mortgages 90+ days delinquent: 7.2% (8th highest)

In 2011 alone, home prices fell by approximately 12.7% in Georgia, more than any other state in the country. Measured from the end of 2006, home prices have plunged nearly 35%, and are projected to fall an additional 4.2% in 2012. More than 7% of homeowners with a mortgage are 90 days or more delinquent on their payments as of April, the eighth-highest rate in the country. In all, total outstanding mortgage debt comes to $246.5 billion, the equivalent of 84.1% of the total property value in the state. This is the fourth highest loan-to-value ratio in the country.

3. Arizona
>Pct. mortgages underwater: 43.4%
>Total property value: $249.17 billion (17th highest)
>Mortgage debt outstanding: $221.71 billion (15th highest)
>Pct. mortgages 90+ days delinquent: 5.8% (20th highest)

While states such as Arizona helped fuel economic growth in the mid-2000s with rising home values and new construction, the housing market began to hollow by 2007 and 2008. Case-Schiller predicts that home prices in Arizona will fall 9% in 2012, more than any other state. But other signs are pointing to an improving housing market, albeit modestly. When 24/7 Wall St. looked at underwater mortgages in March, 48.3% of Arizona’s mortgages were underwater, the second-highest rate in the country and nearly five percentage points higher than a quarter later. Meanwhile, total property value has risen a modest $6 billion between the fourth quarter 2011 and the first quarter of 2012, while outstanding debt has fallen by about $4.5 billion.

2. Florida
>Pct. mortgages underwater: 45.1%
>Total property value: $777.34 billion (3rd highest)
>Mortgage debt outstanding: $684.97 billion (2nd highest)
>Pct. mortgages 90+ days delinquent: 16.8% (the highest)

Home prices in Florida were nearly cut in half between 2006 and 2011. By the end of the first quarter, there were more than 1.9 million negative equity mortgages in the state with another 168,000 near delinquency. Homeowners in the state owe about $685 billion in mortgage payments, more than any other state except for California. Florida’s unemployment rate of 8.6% is above the national average of 8.2%, but it still could help it get out of the mortgage mess quicker than states such as California and Nevada, which have much higher unemployment rates.

Also Read: Countries Where People Work the Least

1. Nevada
>Pct. mortgages underwater: 61.2%
>Total property value: $93.39 billion (23rd lowest)
>Mortgage debt outstanding: $106.45 billion (21st highest)
>Pct. mortgages 90+ days delinquent: 12.1% (2nd highest)

No state has been hit harder by the housing downturn than Nevada. Between the end of 2006 and the end of 2011, home values have tanked nearly 60%, higher than any other state by 7.2 percentage points. In 2011 alone, home prices fell another 9.4%. This has left many Nevadans owing significantly more on their homes than they are worth. The average loan-to-value ratio of a Nevada home is 114%, 25 percentage points higher than Arizona’s 89% (the second highest). In May, 24/7 Wall St. reported that 71% of mortgages in the state’s largest city, Las Vegas, were underwater, with values declining 63.2% from their peak. The state’s unemployment rate is 11.6%, the highest of any state in the U.S., making it that much harder for many Nevadans and damping hopes of a quick recovery.

Samuel Weigley and Michael B. Sauter

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