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More American Homes in Negative Equity, Report Finds

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Nearly a quarter of American homeowners owe more than their home is worth, according to a recent study by CoreLogic, a research company. The number of underwater homeowners grew to 11.1 million in the first quarter of 2011, up from 10.8 million the previous quarter.


Source: Core Logic

The national numbers are bad, but in some states the results are shocking. In Nevada, 65% of all homeowners are underwater. The average loan-to-value ratio in Nevada is 118%, making it the only state where the average homeowner owes more than her house is worth.

“Negative equity holds millions of borrowers captive in their homes, unable to move or sell their properties,” said Mark Fleming, CoreLogic’s chief economist, said in the report. “Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish.”

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Americans owe $751 billion more on their mortgages than their homes are actually worth, the report found. In addition to the 11 million homeowners who are underwater, another 2.4 million have less than 5% equity in their homes. Added together, 27.9% of American homeowners have negative or nearly-negative equity, putting them all at especially high risk if housing prices continue to decline.

And that’s looking pretty likely, CoreLogic says.

“The consensus is that home prices will fall another 5 percent to 10 percent in 2011,” according to the report.

Other hurting states include Arizona, where 51% of homes with mortgages are underwater, and the average loan-to-value ratio is 95%. In Florida, 47% of homes are underwater, followed by Michigan with 36%.

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