With this kind of grim statistic it could be easy to get pretty down on the market, but I think it could be worse. The Wall Street Journal’s report shows the percentages of homes that have mortgage balances over the value of the property.

Some Considerations:

• The majority of the short sales and foreclosures are homes that were either bought, or refinanced during the housing boom years of 2004-2006.
• Pretty much all homes in the Manatee County market are worth about 20-50% of their “peak” value during the height of the market. Not everyone that owes more than their home’s value are in a position that they would have to sell. Almost 90% of the homeowners that want to work are working. These homeowners can afford their homes, and unless they HAD to sell they can typically afford their homes.
• In Manatee County, we have a huge amount of second homes, and vacation properties. These are owned by people that can afford to own multiple homes, and they can afford them as well.
• The stats only reflect homes that have mortgages. Estimates are that 25-30% of homes in our area do not have any mortgages on them.
• You do not experience a “loss” until you sell, so luckily we have plenty of people that aren’t deciding to sell as a short sale.
• Right now only about 3% of the current active/ pending inventory are bank owned sales. A huge back supply of homes that might foreclose if the owners are unsuccessful in doing a loan modification or short sale.

It is demoralizing when you owe more than your home’s value, but, I feel that the majority of sellers in this situation will choose to ride out the market, and stay put.

The decreased inventory backs this up. With less supply and increasing demand. The market will be entering a period of stability.

http://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.html