Rising home prices lifted more than 26,000 Portland-area homeowners above water on their mortgages in 2012, but Seattle-based real estate website Zillow says 28 percent of all mortgage holders still owed more than their home is worth by year's end.
The homeowners are collectively upside-down by about $7.76 billion, according to Thursday's report, which compares mortgage data from the credit reporting company TransUnion with Zillow's home-value estimates. Zillow uses sales of similar nearby homes to take a guess at a particular home's value, though accuracy on individual homes can vary.
If home prices continue to rise, more homeowners paying down their mortgage will break into positive equity, but Zillow and other forecasters expect home-price gains to slow. Still, Zillow says the "negative equity" rate will fall to at least 24.7 percent by the end of 2013.
About half of Portland-area underwater mortgages are under water by 20 percent or less. The rest have a loan that exceeds the value of their home by more than 20 percent.
Nationwide, about 13.8 million homeowners were under water, representing 27.5 percent of all homes with a mortgage. That's a decrease of 2 million homeowners from a year earlier.
Underwater homeowners are at greater risk of foreclosure because they can't pay off their loan by selling their house. A financial shock, like a loss of income, can push them into default.
Negative equity can be difficult to estimate because it relies on an accurate estimate of a home's value. The real estate industry analytics firm CoreLogic said only 10.7 million American homeowners were underwater in the third quarter of 2012, the most recent data released. In Portland, CoreLogic said only 18.2 percent of mortgaged homes are underwater at the end of that quarter.
Courtesy of The Oregonian
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