15 Percent of Area Mortgages Under Water

Someone needs to invent a way of leveraging negative equity, and then name it a SNORKEL. The PSBJ reported yesterday that 15 percent of mortgages in the Seattle-Bellevue-Everett area are under water (it's 16 percent statewide, 24 percent nationally).

This is based on First American CoreLogic's Negative Equity Report, covering 85 percent of all U.S. mortgages. Their chief economist, Mark Fleming, notes that millions of people owning a home worth less than they owe on it tends to drives up foreclosures. For one thing, not being able to sell your house limits your ability to move to find a job if you've been laid off.

Seattle Bubble has an assortment of graphs based on the latest numbers from Case-Schiller; the C-S data breaks out the "Seattle" market (King, Snohomish, Pierce counties) into high, mid-level, and low cost tiers based on sales volume, which is interesting. "Low" at the moment is under $266,000. The Tim casts a cold eye on the last ten months of flat house values--despite the stimulus.

Former Seattle Times real estate editor Tom Kelly quotes Edward Pinto, former chief credit officer at Fannie Mae, as saying, "All we are doing is kicking the can down the street." Writes Kelly, who once offered to sell me a huge old Capitol Hill home on 17th Avenue East for $220,000 and I didn't jump at it, which is why I have trouble sleeping:

Basically, Pinto believes the extra cash the government is tossing into the housing market is simply adding fuel to the fire by depressing prices while foreclosures continue to flood the market.

RealtyTrac shows 3,495 foreclosure filings in Washington this year. This ain't over yet.