Are you underwater too?

60 Minutes just aired an interesting piece about homeowners who owe more on their mortgage than what the house is worth. While those who cannot afford their payments are forced into bankruptcy, a growing number of homeowners who CAN afford their payments are simply "walking away" from their homes. In some estimates, 1 in 5 homeowners who go into default, CAN afford to make their payments but are choosing not to!

Nearly 11 million homeowners nationwide are in such circumstances. California has it pretty bad at 33% but our neighbors to the east Arizona and Nevada are in much worse condition boasting negative mortgage rates at 50% and 65% respectively.

According to Bloomberg:

“A growing number of U.S. homeowners owe more than their properties are worth after prices extended their two-year decline in the first quarter.

Almost 21.8 percent of all owners were underwater as of March 31. At the end of the fourth quarter, 17.6 percent of homeowners owed more than their original mortgage, while 14.3 percent had negative equity three months earlier.

Property values dropped 14 percent from a year earlier in the first quarter, reducing the median value of all U.S. single- family homes, condominiums and cooperatives to $182,378, Zillow said. The gain in underwater homeowners will lead to more bank repossessions, the company said.”

With more foreclosures on the way, we will probably see prices continue to fall until we solve our double digit unemployment rate and see fewer homeowners simply walking away from their homes.