Solano County Home Owners are Underwater

The real estate industry in the US is going through turbulent times. Foreclosures are commonplace and the value of homes has plunged across segments and regions. Take for instance, Solano County, where 60 per cent of homeowners are paying mortgages on homes whose values are much less now than what they bought them for.

Yet there is a group of people in every county who are interested in buying homes. These people are usually first-time buyers. In fact, the number of these people is increasing by the day.

According to a study, 57,719 people in Vallejo-Fairfield or 61.15 percent of homeowners are under water. They are in a negative equity meaning their home values are less than what they owe to the bank. Those near negative equity is much more – at least 64.4 per cent of the population. When a mortgage is within 5 per cent of being upside down, it is known as near negative equity.

In Solano, $15.2 billion property stood the risk of non-payment in June. When compared to Los Angeles, it was much less where $310 billion worth of property was underwater. New York came close on the heels with $183 billion property in negative equity. This was followed by Miami where $152 billion property is upside down.

It may be noted here that homeowners can run up a negative equity because of plunging home values or a hike in mortgage rate. According to the study it could be a mix of both the factors.

In Nevada, the situation is the worst where a greater percentage of homeowners have a negative equity (66 percent). This is higher than Arizona where 51 per cent of people are upside down. Florida, California and Michigan followed close on the heels.

Housing experts say that negative equity has a spiraling effect. When a home in a locality is foreclosed upon, the value of the homes near it plunges. However, there’s a brighter side of the picture as well. The plummeting of values has brought homes within the reach of the first-time buyers. In fact, the affordability index of homes in Solano is 67 per cent now when compared to 49 per cent a year earlier. This was revealed by the California Association of Realtors.

It may also be noted that the minimum income of a household had to be $39,000 per annum to buy an entry-level home at the price of $224,000.

Original Post: http://www.foreclosure1.com/blog/foreclosures/solano-county-home-owners-underwater