Northern South Bay: Fewer Homes Underwater

Inquiring minds are looking at the Northern So. Bay…San Fransisco Bay.

According to Zillow’s third-quarter report on home values, the number of South Bay homes worth less than what their owners paid for them is at the lowest it’s been since early 2009.

The Zillow report on Tuesday states that about one in every 10 homes in Santa Clara and San Mateo counties has negative equity. That is about half of what it was when Zillow began tracking underwater mortgages in the first quarter of 2009.

In the third quarter, which just ended, 11 percent of all single family homeowners with mortgages in Santa Clara County had negative equity, Zillow reported, down from 22.5 percent in early 2009. In San Mateo County, 10.5 percent were underwater, down from 16.7 percent at the start of last year, according to Zillow.

Nationally, 22.3 percent of single-family homeowners with mortgages were underwater, Zillow reported. Las Vegas has the highest percentage, with 80 percent in negative equity. About one in five homes are underwater in the nine-county Bay Area, down from 30.5 percent in early 2009.

The percentage of underwater homeowners in the South Bay has been dropping steadily for months as a relentless stream of foreclosures and short sales eliminates underwater mortgages.

“The short sales, and foreclosures, are getting us through these times,” said Michael Sibilia, president of the Santa Clara County Association of Realtors.

The quicker we do it, the better for everyone.”

Last quarter, 12.8 percent of Santa Clara County homes and 10.7 percent of San Mateo County homes had negative equity, Zillow reported.

About 30 percent of homes sold in Santa Clara County were sold at a loss in September, and 20 percent of sales were for a loss in San Mateo County. These figures vary from one city and ZIP code to another. More than 36 percent of sales in San Jose were done at a loss, and homes sold for a loss were 11 percent of sales in Cupertino, 3.9 percent in Palo Alto and 24 percent in Redwood City.

Famous last words might have been uttered:

Stabilizing home prices have also helped the market, Zillow chief economist Stan Humphries said.

“Home value trends have also stabilized over the year, which serves to keep negative equity down,” he said.

Beware the dreaded ‘two-humped’ camel!

Remember that 58% of the Alt-A loans in the US are in California. Knowing that, does anyone want to bet that the real estate market is actually stablizing?


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