The Disaster Investor

Survive and Thrive in Any Economy

2008
Mar 15

Zillow Map: Homes in the U.S. with Negative Equity

Posted under Housing Bubble, Maps, Oklahoma, Real Estate, Recession, Short sales, Statistics by Darren Hom

20-30% of the homes in the San Francisco/East Bay area have negative equity, meaning that homeowners owe more on their houses than the houses are worth.

Click below to see a full-size version of the map:

http://zillow.mediaroom.com/file.php/259/NegativeOwnerEquity2007-USA+copy.jpg

There’s a method of selling a house that helps the homeowner get out of a situation. It’s called a short sale and involves negotiating with the bank to sell the house for less than the loan balance.

According to this friendly map, there are lots opportunities for short sales in most parts of the country. We’re currently doing this in the San Fracisco Bay Area as well as Oklahoma City.

Bring me a lead and I’ll pay you $600 if we buy the house.

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  1. John Corey Said,

    I wonder where they get their data to determine if someone is in negative equity.

    The public records will show the original loan balance but not the present balance. The value for a specific home is something Zillow gets really wrong in many locations. Given those two facts how do we think Zillow has estimated the negative equity?

    Something like 20% of the homes are purchased for cash. No idea if these are long term buyers or mostly investors doing short term deals which later get resold or refinanced. How might the free and clear properties distort the guesstimate of negative equity Zillow has come up with?

    When it comes to short sales it makes a big difference if the borrower is current with their loan payments. Many folks facing negative equity are looking at a temporary condition. A few more payments or a bit of a rise in the market and they are right side up. Hence a map of negative equity might be a clue for pockets of short sale opportunities but it is a not a hard indicator. I would also consider the employment picture. If people are finding it hard to keep a job and the employment trend is negative then there will be more people looking to bail. The same with the divorce rate for the area. Folks who want out of the relationship and at the same time have an upside down house.

    John Corey

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