Nevada leads the U.S. in the proportion of households whose mortgage debt exceeds the current estimated value of their homes, a condition known as being “upside down” or "under water," according to a new study by First American CoreLogic and reported by the Wall Street Journal on October 10, 2008. According to this report it is estimated that 48% of owners of single-family homes with mortgages in Nevada are under water. That compares with 18% nationwide.
Many Americans are under water because they bought homes at or near the peak of the housing boom and put little or no money down. Others separated equity from their homes during this rapid moment of market appreciation to pay off consumer credit or general examples of consumer consumption. Home values in the Las Vegas metro area have fallen 36% since peaking in early 2006, estimates Zillow.com. Housing depreciation is similar but not as severe in Washoe County with the exception of a couple neighborhoods that were the hardest hit; these include Double Diamond in Reno and Wingfield Springs in Sparks.
Many underwater homeowners can wait for prices to recover. The problem arises for those who lose jobs or have to move. They will have trouble selling their homes for enough to pay off their mortgage and thus may face foreclosure, a short sale or would benefit from seeking a loan modification. Consult with a local real estate or lending professional to seek advice in regards to which appropriate alternative best mitigates your current equity situation.
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