1/3 of sold homes sold for a loss...

Back in October I reported on an analysis by Moody’s Economy.com, about 16 percent of U.S. home owners, or one in six, owe more on their mortgage than their home is worth. About 4 percent were under water in 2006 and 6 percent last year, Economy.com reported. An analysis by Zillow.com estimates that for people who bought their homes in the last five years, the situation is worse: 29 percent owe more than their homes are worth.

Now a new report released recently from Zillow.com says that nearly one-third of homes that sold in the last year went for less than what was owed on them The real estate website calculated that homes values fell 9.7 percent compared to a year ago in 163 metropolitan areas. Compared to the market peak in 2006, home values have fallen 12.8 percent. Home prices have declined for seven straight quarters, according to the report. Over the past year, 30.2 percent of homes sold were sold for a loss. In 17 markets – 14 of them in California – more than half of homes sold in the past year were sold for a loss, the Zillow.com report said.

Locally I can attest to this trend. Of the last five houses that I’ve sold, four of the sales resulted in the seller having to bring money to the closing table and three of them had to be re-negotiated on price, because the appraisal came in for less than the agreed upon sale price. Prices have dropped so far, so fast that even real estate professionals are having a hard time advising their sellers on how quickly and low far to reduce prices.

Basically in our area the “values” of homes have plunged between 18-28% in the last three years. So if you bought a home for $200,000 in 2004, it is likely worth only $150-160,000 now. Even it you put 15-20% down on the home, you are likely underwater right now, since you mortgaged $180-185,000 when you bought.

What can you do? For now tread water and hope that some combination of government programs like Hope for Homeowners or some of the other bail-out programs provide an avenue for relief. More and more of the big banks that bought the failed mortgage lenders have come out with re-work programs for the mortgages that they inherited with those buy-outs. Chase Bank, which bought the troubled Countrywide Mortgage operation, is now offering to restructure up to 800,000 loans where the borrowers are under water. The buyers of IndyMac bank and Wachovia Bank will likely have similar programs or may already have announced them. Locally homeowners who mortgaged through Cleveland-based National City Bank should look for a program from its new parent – PNC financial Group of Pittsburgh, PA.

If you are at or near your wits end on how to keep up with your mortgage, you may want to give your bank a call as see if they have a workout program in place. Most are probably not gong to do a lot of advertising about those programs, but will wait until they are called by the homeowners. If that doesn't work out, visit my Web site - http://www.mishortsales.net/ - to see what your options are to avoid foreclosure.