Despite a Price Gain in December, Signs of Worry on Housing

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. New York Times, By David Streitfeld
 
The wobbly state of the housing market was made clear on Tuesday with the release of data showing that home prices managed a modest increase in December even as many more Americans owed more on their properties than they were worth.
 
The Standard & Poor's/Case-Shiller index of home prices in 20 metropolitan areas rose 0.3 percent in December on a seasonally adjusted basis, with most of the cities improving from November.
 
It was the seventh consecutive month that the index showed rising prices, a welcome respite after several years of wrenching declines. But another 600,000 households slipped underwater during the fourth quarter, with their homes valued at less than their mortgages, according to the data firm First American CoreLogic, a real estate research company.
 
The total number of households with negative equity is now 11.3 million, or 24 percent of all residential properties with mortgages, up from 23 percent in the third quarter, First American said.
 
Negative equity is a major concern among policy makers because it can compel disillusioned borrowers to forsake their properties, contributing to the foreclosure problem. The breaking point for homeowners, research shows, is when negative equity reaches about 25 percent.
 
Five million people are now at or beyond that point, First American estimates, up from 4.5 million in the third quarter.
 
The research firm recalibrated its data in the third quarter, which means earlier negative equity numbers are not comparable. But it said that the number of severely underwater borrowers was growing even faster than it expected a few weeks ago.
 
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