Costa Mesa's Neighborhood Blog

A blog about Newport and Costa Mesa with an emphasis on Costa Mesa Real Estate and Newport Beach Real Estate, written by a lifetime local resident of coastal Orange County whose knowledge of the area, combined with a strong background in mortgages, real estate and being an attorney, gives her clients many advantages.

The Recession Won't Be Over Until Home Owners are No Longer Upside Down

The Recession Won't Be Over Until Home Owners are No Longer Upside Down

 

 

Some believe the recession is over, and we are in recovery.  Others say we still haven't seen the end of it.

 

I do not have an economics degree, but it seems to me that this recession will not truly be over until the American home owner is comfortable in their own home.

 

The American Dream of owning a home, has become a nightmare to millions of Americans in the last few years.  Instead of being a point of pride and comfort, owning a home has become a point of stress and contention for so many.

 

Orange County Bank Repo

 

By the numbers*:

  • 2.8 million foreclosure filings in 2009
  • up 21% from 2008
  • up 120% from 2007
  • 300,000 homes per month are being lost to foreclosure
  • 4.5% of homes in U.S. in foreclosure - 4th Quarter 2009
  • 10.44% of homes in default (30+ days late) - 4th Quarter 2009
  • 15.02% of U.S. homes in foreclosure or default

 

It is estimated that 50% of the defaults in the country are strategic.  This means that people who could pay their mortgage are choosing not to pay their mortgage.

 

Orange County Foreclosure

 

 

 

 

 

 

 

 

 

 

 

 

 

Why would anybody do this?  In Orange County, CA, we lost 40% of median value in the last few years.  If an owner had purchase a $1,000,000 with a loan of $800,000, that home might now be worth $600,000 with a loan of nearly $800,000.  Additionally, that same home might have increased to $1,500,000 with a home equity line of credit for an additonal $200,000.  Now, the owner is looking at mortgages in the amount of $1,000,000 with a value of $600,000.

 

Some people are looking at this and making the decision to walk away, even if it results in foreclosure.

 

 

At a time when few loan modifications are being finalized, homeowners are frustrated and making decisions that do not aid the real estate market.

 

It is estimated that approximately 25% of all Americans are upside down in their homes, meaning they owe more than it is worth.

 

With many Americans believing that their wealth is tied up in their home, this means that many are spending less money because they fell strapped and uncomfortable with their financial situation.

 

If the economy is driven by consumerism, and Americans who are upside down or in fear of becoming upside down, then the economy will continue to falter.

 

Thus, my contention that until Americans owe no more on the mortgage than the value of their home, they will continue to watch their spending, inhibiting the recovery of our economy.

 

What are your thoughts? Can the recession really be over before American are at least even in their homes?

 

 

 

 

 

 

* Per Realty Trac

 

 

***************************************************************************

About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? For more information see Options to Foreclosures, understanding short sales or contact me at christine@donovanblatt.com to discuss your options.

If you want to buy a home or to list your property for sale, please click Newport Beach homes, Costa Mesa homes, Huntington Beach homes or Orange County homes.  Click the link if you are interested in buying a home at a courthouse auction sale.

Contact me at christine@donovanblatt.com or 714-319-9751 to learn about her system which will make your buying and selling experience easier.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.

Click Orange County homes for sale to view all OC homes for sale.

Comment balloon 9 commentsChristine Donovan • April 11 2010 11:46PM
The Recession Won't Be Over Until Home Owners are No Longer Upside…
share
The Recession Won't Be Over Until Home Owners are No Longer Upside Down Some believe the recession is over, and we are in recovery. Others say we still haven't seen the end of it. I do not have an economics… more
Thousands of California Sellers May Get Tax Relief
share
Thousands of California Sellers May Get Tax Relief Under the Mortgage Forgiveness Debt Relief Act of 2007, under certain circumstance a home owner who sells a home as a short sale or loses it in foreclosure may have a write off for the… more
The Appraisal Came Back Too High - Sorry, There's Going to be a Delay…
share
The Appraisal Came Back Too High - Sorry, There's Going to be a Delay in Closing Your Short Sale! (UPDATED) The pendulum has definitely swung. A few short years ago, a borrower could sign his name for a million dollar loan without… more
What Takes Us 2 Days, Takes the Banks 6 Months for Short Sales and…
share
What Takes Us 2 Days, Takes the Banks 6 Months for Short Sales and Loan Modifications Do you ever wonder why it takes so long to get a short sale or a loan modfication completed? It can take months or even years to to get a short sale… more
Can I Afford Your Services? How is my Agent Paid in an Orange County…
share
Can I Afford Your Services? How is my Agent Paid in an Orange County Short Sale In a typical equity sale, the seller signs an agreement to pay a commission to the listing agent, and the listing agent then shares this commission with… more
How NOT to Price Your Orange County Home if You Really Want it to Sell
share
Every seller wants the most money for his home in the least amount of time. Every buyer wants to pay the least amount of money for a home. Buyers looking to buy in Orange County are usually aware that median values have fallen 40% in… more
Newport Beach Short Sale - By the Numbers
share
Over the past few years, Orange County has seen a large decline in median home values. Newport Beach though perhaps more insulated from the decline due to its location next to the coast, has also seen a decline, and this becomes more obvious when… more
Huntington Beach Short Sales - By the Numbers
share
Huntington Beach Short Sales - By the Numbers Huntington Beach has seen a large decline in prices in the past few years, just like the rest of Orange County. As a result, short sales have become common place. It's obvious from reviewing… more
Costa Mesa Short Sales - By the Numbers
share
Short sales are a good portion of the real estate market in Orange County, and Costa Mesa is no exception. There are currently 176 homes for sale in Costa Mesa, 57 of these are short sales or homes that are already in the foreclosure process… more
Orange County Short Sales - A Trend Without End?
share
Orange County Short Sales - A Trend Without End? Short sales have become a hot topic in the last couple of years in Orange County How many people before that were even familiar with the term which refers to the difference between… more