More than 40 percent of homeowners owe more than house is worth
San Francisco, CA -- (SBWIRE) -- 10/03/2012 -- Over half of a million mortgaged homes in Arizona were defined as ‘under water’ during the second quarter of 2012. The amount comes out to 42% of all mortgaged homes and places Arizona as the third highest negative equity in the nation. This, according to CorLogic Inc. reports released Wednesday.
Being ‘under water” refers to homeowners who owe more than their home’s estimated value. CoreLogic determines the equity rate by contrasting under-water homeowners versus all residential properties with mortgages.
Over 521,600 homeowners were categorized as ‘under water’ for the quarter out of the 1.31 million total.
With the nation’s average at 22.3%, Arizona’s average is worthy of concern. The nationwide average has shown improvement since the first quarter, while Arizona continues to dip ever lower.
According to CoreLogic, the nationwide improvement is a result of overall improvement in home prices. However, Arizona is still severely struggling in this department.
Real estate expert Michael Orr of Arizona State University said value estimates on homes vary widely. It all depends on who is making the assessment. This fact makes it difficult to calculate proper negative equity, he said.
Sam Khater, deputy chief economist for CoreLogic explains his firm’s method of determination, saying, “We use value in negative equity estimates because we only know prices on a small subset of transactions. So we estimate value for a property by analyzing prices on nearby properties.”
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