Today saw the release of two housing-related data reports, both of which indicate the persistent weakness in the housing market. S&P/Case-Shiller released its monthly home price indices, which showed that September prices (which are a three-month average of July, August, and September) were down 0.6 percent from the previous month for the 20-city composite index. Of the twenty cities comprising the index, only New York, Portland, and Washington showed (non-seasonally adjusted) price appreciation in September. Three other cities — Atlanta, Las Vegas, and Phoenix— posted new lows in September. Eighteen of the twenty cities posted negative annual changes in prices, ranging from a one-year decline of 9.8 percent for Atlanta to a one-year decline of 0.8 for Dallas. Only two cities posted an annual increase in prices: Detroit at 3.7 percent and Washington, DC, at 1.0 percent. On a seasonally adjusted basis, the Case-Shiller 20-city index has hit a new post-bubble low
The other housing data today come from CoreLogic’s third quarter negative equity report. According to CoreLogic, there are 10.7 million residential properties with a mortgage in negative equity, which is 22.1 percent of mortgage holders. This is down slightly from the second quarter, but still suggests a sizable number of distressed households, many of which are heading to default. The CoreLogic data show wide variation across states in the percentage of mortgage holders that are underwater. Nevada leads the list with 58 percent of all of its mortgaged properties underwater, followed by Arizona (47 percent), Florida (44 percent), Michigan (35 percent), and Georgia (30 percent). These five states have an average negative equity of 41.4 percent, while the remaining states have an average negative equity of only 17.6 percent.
The average underwater borrower has about $65,000 of negative equity, which translates into a total debt overhang of approximately $700 billion nationwide. This aggregate burden varies widely across states. The table below shows state-level data of the number of mortgaged properties that are underwater, the average amount of negative equity for these properties, the aggregate negative equity, and the state’s share of the national mortgage debt overhang. While Nevada has the highest proportion of mortgage holders underwater, it is the sixth highest state in terms of aggregate negative equity. California has about 2 million mortgaged properties underwater, with the average amount of negative equity across these properties of approximately $91,000. This translates into a mortgage debt overhang of about $187 billion, which is the highest among the states and about 27 percent of the total national mortgage debt overhang. Florida has the next highest share of the total national mortgage debt overhang at about 16 percent. The aggregate amount of negative equity in four states (California, Florida, Arizona, and Massachusetts) makes up over 50 percent of the approximately $700 billion of nationwide negative equity overhang. While the housing market is weak throughout much of the country, the distribution of negative equity is concentrated in relatively few states.
State |
Negative Equity Mortgages |
Average Negative Equity Amount |
Aggregate Negative Equity |
Percentage Share of National Mortgage Debt Overhang |
Alabama |
40,299 |
$45,588 |
$1,837,134,503 |
0.26% |
Alaska |
6,746 |
$48,790 |
$329,140,630 |
0.05% |
Arizona |
617,876 |
$58,848 |
$36,361,059,740 |
5.21% |
Arkansas |
24,779 |
$67,179 |
$1,664,640,818 |
0.24% |
California |
2,030,292 |
$91,929 |
$186,642,474,025 |
26.75% |
Colorado |
234,275 |
$43,256 |
$10,133,746,919 |
1.45% |
Connecticut |
106,772 |
$113,484 |
$12,116,883,078 |
1.74% |
Delaware |
26,008 |
$80,958 |
$2,105,552,618 |
0.30% |
Florida |
1,911,419 |
$57,696 |
$110,281,106,187 |
15.81% |
Georgia |
488,310 |
$40,777 |
$19,911,851,873 |
2.85% |
Hawaii |
22,786 |
$101,512 |
$2,313,042,831 |
0.33% |
Idaho |
56,526 |
$46,999 |
$2,656,681,943 |
0.38% |
Illinois |
481,810 |
$60,034 |
$28,925,055,478 |
4.15% |
Indiana |
67,582 |
$35,140 |
$2,374,853,271 |
0.34% |
Iowa |
34,899 |
$59,016 |
$2,059,587,570 |
0.30% |
Kansas |
29,964 |
$46,917 |
$1,405,825,831 |
0.20% |
Kentucky |
25,220 |
$71,706 |
$1,808,437,267 |
0.26% |
Louisiana |
NA |
NA |
$5,092,089,398 |
0.73% |
Maine |
NA |
NA |
$412,872,973 |
0.06% |
Maryland |
315,353 |
$62,546 |
$19,724,038,568 |
2.83% |
Massachusetts |
233,265 |
$127,214 |
$29,674,639,520 |
4.25% |
Michigan |
477,104 |
$40,329 |
$19,241,079,001 |
2.76% |
Minnesota |
96,053 |
$39,556 |
$3,799,468,665 |
0.54% |
Mississippi |
NA |
NA |
$436,590,063 |
0.06% |
Missouri |
123,103 |
$44,003 |
$5,416,871,674 |
0.78% |
Montana |
9,877 |
$70,889 |
$700,165,851 |
0.10% |
Nebraska |
22,552 |
$62,384 |
$1,406,877,352 |
0.20% |
Nevada |
328,369 |
$81,508 |
$26,764,864,405 |
3.84% |
New Hampshire |
42,410 |
$53,202 |
$2,256,300,321 |
0.32% |
New Jersey |
308,187 |
$79,377 |
$24,463,010,179 |
3.51% |
New Mexico |
33,255 |
$83,705 |
$2,783,619,942 |
0.40% |
New York |
118,764 |
$131,173 |
$15,578,666,472 |
2.23% |
North Carolina |
187,608 |
$57,562 |
$10,799,052,527 |
1.55% |
North Dakota |
4,281 |
$53,837 |
$230,475,991 |
0.03% |
Ohio |
498,174 |
$31,221 |
$15,553,267,399 |
2.23% |
Oklahoma |
30,550 |
$64,539 |
$1,971,668,697 |
0.28% |
Oregon |
118,854 |
$41,102 |
$4,885,104,154 |
0.70% |
Pennsylvania |
146,333 |
$74,916 |
$10,962,756,094 |
1.57% |
Rhode Island |
48,950 |
$77,844 |
$3,810,462,276 |
0.55% |
South Carolina |
97,323 |
$54,152 |
$5,270,237,719 |
0.76% |
South Dakota |
NA |
NA |
NA |
NA |
Tennessee |
146,458 |
$41,561 |
$6,086,985,663 |
0.87% |
Texas |
321,551 |
$44,491 |
$14,306,014,547 |
2.05% |
Utah |
94,755 |
$44,953 |
$4,259,514,401 |
0.61% |
Vermont |
NA |
NA |
NA |
NA |
Virginia |
300,924 |
$64,030 |
$19,268,194,085 |
2.76% |
Washington |
245,694 |
$52,445 |
$12,885,445,167 |
1.85% |
Washington, DC |
13,907 |
$81,597 |
$1,134,766,218 |
0.16% |
West Virginia |
NA |
NA |
$75,208,290 |
0.01% |
Wisconsin |
95,551 |
$55,914 |
$5,342,622,850 |
0.77% |
Wyoming |
NA |
NA |
$203,843,069 |
0.03% |
Source: CoreLogic
Commentary
Housing Snapshot: Geographical Differences in Price Changes and Negative Equity
November 29, 2011