The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the housing bust: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%.
For us in Florida, that is a very scary number…45% of all homeowners owe more than their homes current market value! Add to that continued job losses and the potential number of defaults/foreclosures is tremendous.
Hopefully, the expanded and extended homebuyer tax credit will keep a finger in the dyke long enough to give sellers who are not yet under water who want/need to sell to a chance to get out. But looking forward, as the tax credit expires, and if the Fed follows through on its plans to scale back its purchases of mortgage-backed securities (MBS), which will signal the end of these historically low interest rates, I sincerely believe that we will see a resumption of the decline in home values here in South Florida.
Sellers and those thinking of selling take heed…your window of opportunity is the next 6 months…
