Going, going, but not quite gone.
We’re talking about homeowners whose mortgages are underwater. A new report from CoreLogic, the real estate information service, shows that 6.4 percent of properties in Alameda and Contra Costa counties remained in negative equity at the end of 2015.
But that was down from 9.3 percent a year earlier — and far removed from the end of 2009, when 36.3 percent of mortgages in those East Bay counties were in negative equity as the recession took hold and the housing market crashed.
“The decline in negative equity mainly reflects rising home values and people paying down their mortgages,” said Andrew LePage, research analyst for Core Logic. “As the economy has improved, fewer people find themselves underwater.”
The rest of the Bay Area gets an improved report card, too. Only 1.9 percent of homeowners were underwater in Santa Clara and neighboring San Benito counties at the end of 2015, compared with 3.6 percent the year before and 22.4 percent at the close of 2009, when 26 percent of the nation’s properties were upside down.
In San Francisco and San Mateo counties, just 0.7 percent of properties were in negative equity at the close of last year, down from 1.3 percent in 2014 and 10.4 percent in 2009.
Negative equity — colloquially described as “underwater” or “upside down” — refers to borrowers who owe more on their mortgages than their homes are worth. In the lead-up to the recession, risky aggressive financing got more homeowners in trouble in the inland East Bay counties than in coastal stretches of the Bay Area.
All in all, the report is an indicator of economic health. The drying up of underwater mortgages is “a pretty good sign that home equity is being created,” said Frank Nothaft, CoreLogic’s chief economist. “The bad news is that if you haven’t bought in the market yet and you’re looking to buy, home values have gone up a lot and it’s getting to be increasingly difficult.”
Statewide, 6.7 percent of California properties still were underwater at the end of 2015, improved from 9.3 percent in 2014 and a whopping 37.3 percent in 2009.
Around the Greater Bay Area, the lingering effects of the housing crash are especially dramatic in Solano County, which includes Vallejo and Fairfield. In Solano, 11.7 percent of properties still were upside down in the fourth quarter of 2015, though that was much improved from 2009 when more than two out of three mortgages — 67.3 percent — were in negative equity.
Nationally, CoreLogic’s latest numbers show that 4.3 million mortgages — 8.5 percent of all properties — remained in the negative at the end of 2015. One year earlier, 5.3 million homes were underwater: 10.7 percent.
Looking at selected metropolitan areas, Miami-Miami Beach-Kendall, Florida, had the highest percentage of underwater properties in the fourth quarter of 2015 — 22 percent.
The San Francisco-Redwood City-South San Francisco area had the highest percentage of mortgaged properties in a positive equity position — 99.3 percent.
There’s still room for improvement.