Underwater Homeowners "Here To Stay" Zillow Says

Tyler Durden's picture

A few weeks back we commented on the rather disturbing news that repeat foreclosures jumped in January: 

According to Black Knight Financial, both new and repeat foreclosures hit a 12-month high during the first month of the year with repeats (i.e. the borrower was rescued but has since entered the foreclosure process again) jumping 11% M/M. More troubling is the trend in repeat foreclosures which accounted for only 15% of total foreclosures during the crisis but now make up a startling 51%. 

Here’s what the trend looks like: 

Now, a new report from Zillow seems to offer further evidence that the US housing market may not be the picture of health after all (as if we needed more proof after housing starts cratered 17% in February). The percentage of homeowners underwater in the US was flat from Q3 to Q4 which doesn’t sound all that terrible until you consider that this figure had fallen for 10 consecutive quarters. Things look particularly bad in Florida and the midwest where Zillow notes more than 25% of borrowers are sitting in a negative equity position. Here’s more: 

In the fourth quarter of 2014, the U.S. negative equity rate – the percentage of all homeowners with a mortgage that are underwater, owing more on their home than it is worth – stood at 16.9 percent, unchanged from the third quarter. Negative equity had fallen quarter-over-quarter for ten straight quarters, or two-and-a-half years, prior to flattening out between Q3 and Q4 of last year…

More than a quarter of mortgaged homes are underwater in some markets in Florida and the Midwest…

Click on the image for interactive version

Zillow goes on to note that we have entered a new era in the US housing market: the era of the underwater homeowner. Even better, the report goes on to note that in a number of cases, borrowers will likely be “in negative equity forever”: 

...this represents a major turning point in the housing market. The days in which rapid and fairly uniform home value appreciation contributed to steep drops in negative equity are behind us, and a new normal has arrived. Negative equity, while it may still fall in fits and spurts, is decidedly here to stay, and will impact the market for years to come.


In fact, some homeowners trapped very deeply underwater may essentially be in negative equity forever. And those homeowners are much more likely to own America’s least expensive homes. Making matters worse, many homeowners in the bottom home value tiers are not only underwater, but very far underwater. Consider, for example, homeowners of the least expensive homes in the Detroit metro area. These homeowners are 29 times more likely to owe twice as much than their house is worth compared to a homeowner at the high end of the market.

The good news (and this seems to synch with what we saw in the latest UMich Consumer Sentiment print), is that rich people are doing ok: 

Negative equity is not an equal-opportunity predator, and looms larger over less expensive homes. Nationwide, 27.3 percent of homeowners with a mortgage in the bottom one-third of homes by value were underwater in the fourth quarter. The negative equity rate among top-tier homeowners was 9.1 percent. In some areas, this gap was even more distinct. In Atlanta, for example, 49 percent of homes in the bottom-third of home values are in negative equity, compared to 11 percent of mortgaged homes in the highest-valued third.


Now it’s starting to make sense to us why we were having trouble understanding the notion that a “recovery” was well underway in the US. It’s because we didn’t understand that a recovery was usually characterized by an epochal shift towards deeply underwater homeowners and where negative equity becomes a permanent fixture in the market. 

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venturen's picture

if only they had put all their money in Dana Corp

max2205's picture

Pay your monthly payment bitchezzz-


saveUSsavers's picture

Pay or move in with Mommy, arsewholes.

Yes We Can. But Lets Not.'s picture

This analysis significantly understates the % of underwater homeowners for at least one reason - settlement costs borne by seller.  For example, if you paid $100,000, borrowed $80,000, owe $70,000 today, home would sell for $60,000, you are underwater by $10,000.  But not really.  Gotta knock of 6% for transaction costs and say another 1% for other settlement charges borne by seller.  So knock off $60,000x.07=$4,000.  So you are underwater by $70,000-$56,000=$14,000.  Realtors hate this sort of analysis.

smlbizman's picture

that is pretty fucking funny.....someone putting 20% down.....now do ur analysis right, in the land of reality...u know 3.5% down with 105%(rebated closing cost,et.als) ltv and of course we can get you another 25k with this heloc....so underwater by how much?....

Harbanger's picture

This is deflationary news.

froze25's picture

I stopped paying well over a year ago, the house is so far underwater that my 20% down payment vanished and is still down about another 20% so I spoke to my wife and a good friend from childhood that specializes in foreclosure defense law as an attorney.  We decided that a strategic foreclosure was the best course of action financially.  My house had all the markings of a securitized loan that had been bought and sold like _______ whoar.  All we do now is bank our usual mortgage payment and pay the property taxes ourselves.  My friend believes he can defeat any foreclosure action that they can bring as they have been unable to answer any of his discovery request.  He has also won many foreclosure cases already so I know he can do it. F'em  they want me to take the lose while they collect on me forever, no no no I don't think so.

Four chan's picture

keep going i short sold out of mine saving 70% of the loan value. its nice not making payments isn't it?

you are almost through the looking glass, keep going. and for those bitter at my words i made payments for

40 years and because the banks won't do principal write downs long after they have gotten their money back

we are stuck in the mess we have today. stop paying your masters, one day they will see a paying

homeowner is better than a street full of stripped out homes worth less than zero.

j0nx's picture

I stuck it through on my home and I was down 40% at the worst. My neighborhood dropped 70% from peak from 2007-2010 and then was stagnant for the next 2 years until it started to rise again. Then all of a sudden it rose a lot in 6 months so I sold for what I owed and I bailed with my credit in tact. I also probably had to deal with a lot more shit than you do because the hood was full of illegals and section 8 deadbeats who wouldn't follow rules , overcrowded and trashed everything. The association of course would do nothing. I suppose you gotta do what you gotta do so good luck.

Shaznardickleze the Doon's picture

Unfortunately for the rest of us your fuckit attitude is fucking everyone. Especially those who've never owned a home. So fuck you?

Omen IV's picture

You are an IDIOT!


Kudos to all those who fuck the system - homeowners and lawyers alike


the conditions are bankster created not the home owner

boogerbently's picture

You're not F'ing the "game" or the "bank", you're F'ing your friends and neighbors.

NuckingFuts's picture

If you signed the loan, you are responsible for it. Regardless of how crooked the banks are. You folks are lucky you didn't borrow from a loan shark or you would be in the hospital now. No one made you take the loan, mostly folks were just greedy and wanted moar. Now it didn't work out the way you thought and you don't want to pay up. Personal responsibily is a huge part of liberty, don't like it?. Don't borrow. I have no sympathy. I paid cash for mine and live below my means, I refuse to join the FSA and if you are not paying your debts you have, regardless of how you try to justify it to yourself.

Abbie Normal's picture

When people sign loans, they are responsible.  But when TBTF banks sign loans, they get bailed out.  See anything wrong with that?

In any case, your viewpoint is bullish for debtor's prison.

NuckingFuts's picture

I choose to take the moral high ground and not compare myself or my ethic to the TBTF crowd. So, no I don't see anything wrong with my view point. If you choose to take the low road with the rest of them, good luck. I'll choose to do the right thing, even if no one else is.

PresidentCamacho's picture

Don't hate the player, hate  the game. He didn't make the rules, he didn't set up fradulent lending and mortgage financialization leading to the meltdown, he is just managing his position the best he can.

When the big guy thinks he can fuck you , sometimes you have to fuck him first with a broken bottle.

Shaznardickleze the Doon's picture

When you willfully play a rigged game, you get what you deserve. Not my sympathies or my congratulations. The players who played the rigged game and bitch about it are hilarious. Don't play, simple.

NuckingFuts's picture

If you hate the game, why did you play it? If you play, you pay. You don't cry about how unfair it is, if you didn't know that ahead of time you prolbably have no business taking a loan.

malek's picture

First why would anybody need to own a home he can't afford?
And you do you realize he is playing by the rules?
Fuck you too.

Rikky's picture

you're no different than the thieves in the banking sector.  i'm sure you think you're all hot shit and all as you play the same ripoff game the others do but in the end you're no different than the scum you rail against.  at the very least you should try a short sale that's at least an agreement with the bank on the loss and how to resolve.

Ramesees's picture

I think this map is misleading at best.  The housing market is quite hot in at least some areas.

Yesterday, I wanted to put a bid in on a moderately-priced house in a mid-size Southern city, the house is renovated and is located in an infill suburb (read: good neighborhood, but not old money country club).  When I called the broker she said that the house went on the market 3/18 at noon, they had 20 showings that day and 4 bids that night, one of which was accepted.  Less than 12 hours on the market.  They are taking backup bids, though.

Certainly seems like 2006 housing mania has hit certain cities and neighborhoods. 

j0nx's picture

Yup. Northern Virginia area is 2006 all over again. We are deciding to stay in our rental and wait it out. Even though the rental is nasty as shit, old and outdated at least it's cheap and is a SFH in a decent hood.

Citium's picture

I am a real estate broker in East Texas and the Dallas market is on fire. It did this back in 2012 as well and our rural land market usually follows the DFW area by 6 months. But I know they are listing 500,000 - 1,000,000 Dollar homes and getting 4 to 5 offers the FIRST DAY. That is 2006 mania all over again.


At this point, personally, I have sold my home moved out to the farm and put a paid for modular for the time being. NO debt and arable land with spring water sources and plenty of livestock.


I would stay away from homes YOU KNOW are out of your price range but the interest rates want to suck you in and stay the HELL away from most commercial property. I would also add stay away from farm land in the wheat belt that people are paying $20,000 an Acre for. Land here is reasonably priced at $2-3 Thousand an Acre. I'm personally thinking about shuttering our doors at the end of the corporate year in 2016 and switching our office space to a by and trade type place. I have a lot of industrious people in my family and want a location to sell all their stuff.


I don't want to be blamed for this mess. I tell people that are buying homes at 0% down and No closing costs, as they are rolled into the USDA loan, that are making high school teacher salaries trying to buy a 300,000$ home just don't do it. But what can you do if someone just wants something. Only way I can live with what I do. Tell em the truth and if they refuse to listen then that's on them unfortunately.

daveO's picture

Zillow mangaed to avoid the word sub-prime. Baannie Fwank would be pwoud. Debt slavery, it's here to stay.    

Shaznardickleze the Doon's picture

Debtor prisons will be the new retirement communities.

Atlantis Consigliore's picture

Beat those 50 shades of Realtors;  get out there and make them buy,  or F******in  DIE.

we need a Jordan Belfort in the Real Estate industry....


oh, we did that already? with Fanny And Freddie Fraud?  we got 5% down loans FHA????



spastic_colon's picture

yes zillow, that bastion of accuracy and objectivity......had a friend recently buy a house that showed as 1.66M on zillow.....he bought it for 850k....zillow is a joke created by realtors for the sole survival of same.

chunga's picture

Yeah that underwater number just seems awfully low. Ya gotta wonder how many people, with nothing to lose, are about ready to snap.

With all this newly invented QE money out there looking for people you have to figure underwater homeowners are also underwater auto owners. The sub-prime auto shit has caused used prices to go crazy. I've been looking at used pickups for a while and I'm still looking because the prices are mental.

There was a guy on craigslist wanting someone to take over the payments on his almost new 1/ 2 ton truck. He actually explained in his ad he'd be filing BK next week and wanted someone to take over the payments...for 44K!

Throw in a super crappy job or two if you're "lucky" and you really have to wonder how happy and content these people must be, like Jack Lew says they are.

maskone909's picture

Obama loans....i admittitdly dont know much about them other than you are locked into your mortgage for a set amount of years. That could only contribute to the number of underwater loans, right? Also, are obama loans ARMS? My friend said his mortgage went up when rates moved.... Thanks

froze25's picture

Obama loans are bs, better off forcing a forclosure action than reaching settlement, new terms with the bank directly.

chunga's picture

here's some typical language....

tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX


The following agreement is approved by the Office of the Comptroller of the Currency, Securities and Exchange Commission, Fair Trade Commission, Financial Industry Regulatory Authority, Commodity Futures Trading Commission, The Federal Reserve System, Office of Thrift Supervision, Federal Trade Commission, Federal Deposit Insurance Corporation, Mortgage Bankers Association, American Bankers Association, National Association of Insurance Commissioners, National Association of Realtors, National Foreclosure Mill Guild, Department of Justice, US Supreme Court, US Congress, US House of Representatives, Office of the President, Office of State Attorneys General, Goldman Sachs, Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, GMAC, Fannie Mae, Freddie Mac, AIG, Morgan Stanley, FHA Refinance Program Fund, PNC Financial Services, US Bancorp, SunTrust, Capital One, Regions Financial, Fifth Third Bancorp, MERS, Hartford Financial Services, American Express, BB&T, Bank of New York Mellon, KeyCorp, Comerica Incorporated, Blackrock, Invesco, OneWest Bank, Discover Financial Services, Ocwen Financial Corporation, Company Corporation, Litton Loan Servicing, Saxon Mortgage Services, Aurora Loan Services, East West Bancorp, Flagstar Bancorp, CNBC, National Association of Notaries, LPS, DocX, Countrywide, Harmon Law, and is subject to the following terms.


By reading this document, which may change or be withdrawn without notice, you waive any and all rights you may or may not have, past, present, and future and unequivocally agree to the following terms under pain of Death.


  Before being considered for a loan modification you, your family members (born and unborn), friends, associates, acquaintances and pets, must submit one thousand [1000] certified copies of the following:

1. The amount of any and all bank, checking, savings accounts, including account numbers and passwords.

2. Complete list and location of any assets held in physical possession. [i.e.;  in cookie jars, under your mattress, etc.]

3. Birth Certificates, Passports, Social Security Cards, Complete Employment History Affidavits, IRS Forms, Credit Reports, Medical History, and political party affiliation.

4. Vehicle Identification and Registration numbers, including Proof of Insurance, of any and all vehicles and supporting Affidavit[s] describing their use, purpose, mileage, and location.

5. Certified DNA samples.

6. Certified Finger Prints.

7. Certified Retina Scan.

8.Certified Blood Sample.

9.Certified Urinalysis Examination.

10.Proof of Title Insurance payable to the undisclosed party and their agents.

11.Proof of Title Re-Insurance from Lloyds of London payable to the undisclosed party and their undisclosed agents. 

 Certified copies of the complete list above must be mailed to the undisclosed party and their undisclosed agents within twenty four [24] hours and must be received by the undisclosed party and their undisclosed agents within twelve [12] hours at the following address.




P.O. Box 1776

Maiden Lane

New York, NY 10005 


Alternately, to better serve our customers, you may send your complete document package via fax to the number below. Attention undisclosed party and undisclosed agents.




In order to assure Quality Control, upon receipt of the documents listed above and in addition to any and all others that are required but not disclosed, your eligibility for a loan modification will be determined by an undisclosed party and their undisclosed agents that may or may not be a party of interest and may or may not have standing to enter into any potential agreement[s].

The undisclosed party and their undisclosed agents retain the right to commit state and federal mail fraud, wire fraud, FDCPA violations, unfair and deceptive acts and practices, conspiracy, money laundering, racketeering, tax evasion, fraud upon the court, uttering fraudulent documents, fraudulent conveyance, slander of title, financial institution fraud, securities violations, and identity theft with impunity.

The undisclosed party and their undisclosed agents neither admit nor deny any involvement in any potential agreement[s] that may or may not result. Any agreement[s] made are non-binding and the undisclosed party and their undisclosed agents shall be held harmless from the beginning of time to eternity.

In accordance with the strict guidelines established by the undisclosed party and their undisclosed agents, any potential loan principle correction shall be no less than the original outcome based appraisal value and shall be no more than one hundred [100] times Present Market Value with a variable and/or fixed interest rate not to exceed one hundred [100] percent.


Should an agreement be reached between the undisclosed party, their undisclosed agents and the borrower, the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets shall agree and consent unequivocally to the following terms.


1. The borrower’s breech of any potential preliminary agreement shall be determined solely by the undisclosed party and their undisclosed agents.

2. In the event of borrower’s breech of any potential preliminary agreement; the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets shall waive any and all rights previously afforded them up to, including, but not limited to the SPCA, US Constitution, The Bill of Rights, and The Geneva Convention.

3.    In accordance with the strict terms established by the undisclosed party and their undisclosed agents, the borrower, the borrower’ family members, friends, associates, acquaintances, and pets consent to unlawful search and seizure, wire-tap, harassment, kidnap, torture, trespass, ankle bracelet monitoring, random drug tests, unmanned drone surveillance, unlimited detainment, mandatory behavior modification and Pepper Spray.

4. The borrower’s breech of any potential preliminary agreement shall immediately result in wage garnishment for the borrower, the borrower’ family members, friends, associates, acquaintances, and pets.

5.    In the event of borrower’s breech of any potential preliminary agreement; the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to a permanent barcode tattooed front forehead and both temples that shall remain visible at all times.

6.    At the sole discretion of the undisclosed party and their undisclosed agents, the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to indefinite detention in an approved FEMA camp or Guantanamo.


7.    At the sole discretion of the undisclosed party and their undisclosed agents, should the costs associated with incarcerating the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets become burdensome they consent to extermination.


8.    The borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to, and rightfully accept complete responsibility for destroying The US Constitution, The Bill of Rights, the wholesale corruption of our government, and the destruction of the World Economy.





     Due to the proprietary nature of the strict requirements dictated by the agreement between the undisclosed party and their undisclosed agents, the terms of the potential preliminary Loan agreement cannot be made available to the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets. They are articulated in the attached contract found on pages [7 – 30,000] and will be stored somewhere at the sole discretion of the undisclosed party and their undisclosed agents.

The undisclosed party and their undisclosed agents retain the right to alter, destroy, or lose the 29,993 page attachment.





Deadbeat Signature                                  



Affix undisclosed party corporate seal here (optional)


SethDealer's picture

invest in facebook

Shaznardickleze the Doon's picture

I couldn't think of anything more sarcastic to do with my money. This is probably decent investment advice in a world gone full retard.

Monetas's picture
Monetas (not verified) Mar 20, 2015 8:27 AM

Negative equity and negative interest rates coming soon !

Earl Slaughter-- Truck Driver.'s picture

If nothing else discourages millenials from "home ownership"...


Great example of the hazards of falling for propaganda and group-think-- "The price will never go down!"


No worries-- VCs will gladly purchase that bag you got caught holding... for pennies on the dollar...

corporatewhore's picture

the prices they're asking clearly indicate they have no appreciation for incoming deflation. asking price has not adjusted to the reality of what people are earning outside of the 1%

Lady Jessica's picture

So.  That window Guy Haselmann was talking about.  That window during which the Fed might conceivably have raised rates (he suggested it might have been some time in 2014).  I think that window might now be closed.


Atlantis Consigliore's picture

Oh, wait till the 2005 HELOCs  2nds burst in 2015, and remain in 2nd lien position;  and the 17% foreclosed 

cant  refinance HUMDA, BUMDA, BIMBO Govvy scam refi programs with neg equity, cause the 2nds are in the way.


OH OH!!!!,  be like Vegas,  if it was foreclosed 18% of homes will stay foreclosed...forever. 

maskone909's picture

Fny how the harp program will only lead to more HELOC's. Never ceases to amaze me. However, if QE and TARP taught us one thing, is that its ok to turn your house into a credit card. Why? Well, because nobody ever has to pay their bills! Its like little kids asking for a "do-over"

Thisson's picture

Why haven't we seen more fallout from the 2004 HELOC busts in 2014?  I remember a chart prepared by Credit Suisse that showed that there would be DOOM in 2014.  It didn't happen.  Why will 2015 be different?

IronShield's picture

Hey, does this mean all my favorite shows on HGTV will go the way of the dodo? 

"Love it or List it", "Fixer Upper", "Income Property" ...

and my personal favorite, "Property Virgins"

corporatewhore's picture

where can i find the zero down I need?

yogibear's picture

Fed is saying dump US dollar. They and their banks have unlimited printed money to buy up 100% of the mortgage and treasury debt.

Seasmoke's picture

Every underwater homeowner needs to STOP paying. Demand principal reduction. Otherwise live in house 5 years and then short sale to another underwater neighbor and vice versa. It's time for American homeowners to WAKE THE FUCK UP. YOU WERE ROBBED OF YOUR EQUITY !!!!

BandGap's picture

I would agree, however, are you aware that you have to pay taxes on that forgiveness?

If you short sale a house, say 80K, the tax laws are such that you owe taxes on that 80K. While the bank gets stiffed, the federales never do.



j0nx's picture

AFAIK the debt forgiveness act of 2007 is still in effect. I'm pretty sure it was just extended again making home debt forgiveness in short sales and foreclosures non-taxable. Many banks choose to come after the owner now for the deficiency anyway instead of forgiving it or at least that's what I've been told. In the old days not so much but now they are getting more aggressive about the deficiency.

mayhem_korner's picture



Remind me again who forced people to sign the mortgage agreement.

mayhem_korner's picture



You must have me confused with someone else.  I only pay taxes on my property.

Jumbotron's picture

( chuckle ).....Then you're still a tax nigger and slave.  Who forces you to pay property tax?  Stop paying your property tax and find out.   You don't own shit....ever....in this life and in this world.