Number of houses underwater is rising
The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.
CoreLogic said Tuesday that about 11.1 million households, or 23% of mortgaged homes, were underwater in the October-December quarter. That's up from 22.5%, or 10.8 million households, in the July-September quarter.
The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes went into foreclosure.
Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point of the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5% of homeowners are underwater.
About 2.4 million people have only 5% equity or less in their homes, putting them near the tipping point if prices in their area fall.
Roughly two-thirds of homeowners with a mortgage in Nevada had negative home equity, worst state in the country. Arizona, Florida, Michigan and California were next, with nearly half of homeowners with mortgages in those states underwater.
Oklahoma had the smallest percentage of underwater homeowners in the October-December quarter, at 5.8%. Only nine states recorded percentages less than 10%.
When a mortgage is underwater, the homeowner often can't qualify for mortgage refinancing and has little recourse but to continue making payments in hopes the property eventually regains its value. . . .