Unfortunately, there is more bad news for many hardworking homeowners, according to a Seattle Times news article. It reports 34.3 percent of homeowners in Pierce and King counties owe more on their homes than their property is actually worth.
Written by business reporter Eric Pryne, the headline reads: “Third of homes in Seattle metro area worth less than what’s owed.” His newspaper article on Feb. 8, 2011 quotes data from Zillow.com.
The fact that one third of homeowners in the Seattle/Tacoma area are underwater on their mortgages will certainly lead to more foreclosures and bankruptcy filings.
For those individuals who owe significantly more on their mortgages than the home is worth, it no longer makes good economic sense to continue paying their mortgages.
This area is catching up on the national trend of homeowners simply walking away from their homes and allowing them to go into foreclosure.
Also, for those individuals with large second mortgages that are not cancelled in a non-judicial foreclosure, bankruptcy may be the only means of relieving their liability for a home they no longer own.
“At the end of 2010, 34.3 percent of all single-family homeowners with mortgages in King, Snohomish and Pierce counties were ‘underwater’ on their homes, Seattle-based Zillow said,” wrote Mr Pryne. “That was higher than the national figure, 27 percent.”
Incidentally, this unfortunate data means an increase of 23 percent in just 12 months.
“This region’s rate of increase over the past year – and especially over the last quarter – also topped the national increase,” wrote Mr. Pryne.
“Negative equity can have a significant impact on both the housing market and the broader economy, especially if the gap between the home’s value and the loan balance is large, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University,” Mr. Pryne quoted Mr. Crellin.
“It increases the likelihood that owners will default — even if they still can manage the payments,” he said (wrote Mr. Pryne in quoting Mr. Crellin).