Go to home page

BY BILL FREEHLING

About 30 percent of single-family homeowners with mortgages in the Washington area are under water on their loans, according to data from Zillow.com.

Being under water on a loan, which is also called having negative equity, means that the home's current value is less than the original mortgage amount. For example, someone who borrowed $300,000 to buy a home now worth $250,000 is under water.

Zillow, a real-estate tracking site, released its third-quarter figures Monday. As of Sept. 30, 29.6 percent of single-family homeowners with mortgages in the Washington Metropolitan Statistical Area were under water on their loan.

Fredericksburg and Fauquier, Spotsylvania and Stafford counties are all in the Washington MSA. Zillow does not break out individual localities in its analysis. But given that foreclosures have been as significant a problem in the Fredericksburg area as just about anywhere in the state, the 30 percent figure is probably representative of the percentage of area mortgage holders who were under water as of Sept. 30.

Zillow uses its own estimates of home value to calculate the figures. It compares that number with the original mortgage amount only and does not factor in principal payments or home-equity withdrawals.

The 29.6 percent figure is an improvement from June 30, when Zillow estimated that 33.5 percent of Washington-area single-family mortgage holders had negative equity. Home values in the Washington MSA rose 0.76 percent between June 30 and Sept. 30. That and the addition of newly purchased homes likely accounted for the improvement.

The Fredericksburg-area median housing sales price of $205,000 in October, about where it has been most of the year, was at levels from late 2003. Most people who bought a house in the area using traditional financing between 2004 and 2008 will have negative equity.

The large percentage of homeowners with negative equity concerns policymakers because of the risk that some of the people--particularly those who are significantly under water--will decide it makes more sense to walk away from the home rather than making mortgage payments higher than the market now dictates.

Nationwide, according to Zillow, the percentage of single-family mortgages with negative equity was 21 percent as of Sept. 30, down from 23 percent June 30.

Though the Washington MSA had a higher-than-average negative equity rate, the Richmond MSA fared better than the norm. In the Richmond MSA, which includes Caroline and Louisa counties, 16.3 percent of single-family mortgage loans were under water as of Sept. 30, down from 17.8 percent as of June 30.

To see more of the data from Zillow, as well as local housing numbers, go to fred ericksburg.com/blogs/biz browser.

Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com