Everyone Go Swimming!

In: Housing Interactive Maps

25 May 2012

A nice map of estimated US mortgages underwater (owe more than it’s worth) from Zillow. Interesting data, but the color ranges are too close in hue for my eyes. When I zoomed into Washington DC I couldn’t tell which range was which unless I used the rollover. I also had a question about the data: how could you end up >200% underwater? (via The Big Picture)

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6 Responses to Everyone Go Swimming!

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Martin Barry

May 25th, 2012 at 2:24 pm

A first mortgage with very little deposit plus a second or even third mortgage followed by a sharp fall in price and it’s quite easy to imagine someone owing more than 200% of what a home is worse. The mind boggles at the lack of foresight from both the borrower and the banks but it’s certainly believable.

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Matt M

May 25th, 2012 at 2:38 pm

I agree with Martin.

To throw some numbers…

Say you bought a condo for $175,000 mortgage with $25,000 down, just before the bubble burst.

Now it’s worth $50,000. You are 200% underwater.

I have friends who are in a very similar situation.

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Susan Schmid

May 26th, 2012 at 6:02 pm

I agree about the hues being too close and I found that in “busy” areas the rollover doesn’t work correctly so some counties are never accessible. On a broader level, while this is an interesting and potentially useful graphic, it is only as good as what underlies it and based on the absolutely bizarre valuations Zillow puts on things in my local area I wouldn’t have much faith in this.

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Davidwhitewolf

June 7th, 2012 at 11:20 pm

The other way to get to 200% is with a cash-out refi. In our case, (SF Bay Area) our first home cost $X in 2005, we refi-d to 1.25x a couple years later and used the cash to pay bills, visit Europe, etc. — and not too long ago Zillow had our house valued at a tad more than 1/2x. If prices drop to 1994 levels we’ll be at 1/3x — i.e., 200% underwater.

Lots of people around us did cash-out refis, for a lot more $ than we did. Lots.

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Jerome

June 8th, 2012 at 11:35 am

I think the issue is how you compute percentage. If Mortgage = M and current Value = V, and M > V, then (M – V)/V can easily be over 2.00. But (M-V)/M could never be greater than 1.0. So, the question is percent of mortgage, or percent of current value.

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Jim

June 8th, 2012 at 1:11 pm

Well, looks like some banks have learned something. I just refinanced…and the maximum that they’d lend was 60% of the value of the house. Personally, I think that’s a bit “overly conservative”…but I guess that it also protects me.

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