Third of recent buyers owe more than home's value: report
Tue Feb 12, 9:48 AM ET
More than 30 percent of U.S. homeowners who bought in the last two years owe more on their mortgage than their house is currently worth, a housing market research company said on Tuesday.
The housing market peaked in most U.S. markets in the last two years. Of home buyers in 2006, 39 percent of those with a median 10 percent down payment now have negative home equity similar to 30 percent of those who purchased in 2007, said online company Zillow in its quarterly home value report.
Overall, only 3 percent of those who purchased in 2003, and less than 1 percent of all homes in the United States regardless of when they were purchased, have negative equity. At the same time, U.S. home prices fell 3 percent last year from 2006. Condos and single-family residence values dropped 7.4 percent and 5.5 percent, respectively, the report said.
Nationwide in last three months of 2007, all home types fell 3.3 percent from the third quarter and 3 percent year-over-year. "With consecutive declines over the past five quarters, we haven't seen the housing market bottom yet, and it may very well get worse before things get better," said Stan Humphries, Zillow vice president of data and analytics.
"Even many markets that have been largely insulated from recent declines, like some in the Pacific Northwest, reported notable value declines in the fourth quarter," he added. Home values overall fell in the fourth quarter of 2007, to around $224,890, while condominiums posted the largest year-over-year drop, down 7.4 percent to around $229,017.
The fourth-quarter Zillow report taps data for the nation and 125 metro markets, covering 67 million homes. (Reporting by Chris Sanders; Editing by Jonathan Oatis)
5 comments:
Calculated Risk suggests that "other data shows it's closer to 10% of households with mortgages or 7%+ of all homeowners have no or negative equity."
What a freakin' disaster.
The other ingredient for this bomb is carrying costs (interest, taxes, etc) that greatly exceed market rent.
Put them together and... BOOM!
"The other ingredient for this bomb is carrying costs (interest, taxes, etc) that greatly exceed market rent."
This is pretty much anyone who bought in the last four years or so here in Vancouver. Fortunately, that is not too many people........ :)
Apparently renters in California are receiving eviction notices as their landlords are foreclosed on. Does anyone know what rights are granted to renters with leases or month-month agreements during a foreclosure process in B.C.?
I found this advice from apartmentguide.ca.
"The way this works out is simply that the ownership of the property changes hands. Your tenancy continues and your rent simply goes to someone else, who is recognized by the courts as the landlord."
Interesting that in California the laws do not protect the tenant to the same degree. So it looks like tenants in BC are well protected under the foreclosure process and, for those with a lease, anyone that forecloses needs to comply with the lease agreement. Nice to know for renters out there. This in part explains why mortgage lending in Canada is a bit more conservative than in the US.
BC Lawlink has lots of resources on housing law in BC.
Your advice is correct. Change of ownership of a property does not affect tenancy. The new owner assumes all contractual obligations of the previous owner.
Remember that even under a month-to-month tenancy, tenants cannot be evicted without cause. A change of ownership, or putting a property up for sale, is not cause.
Back in the 80's it was common for the forecloser to negotiate a voluntary departure from tenants to make the property easier to sell. A few month's rent generally was good enough. A drop in the bucket compared to the costs of foreclosure and subsequent sale.
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