(Source: By Marijke Rowland, The Modesto Bee, Calif. (MCT) – MODESTO — More than half of Stanislaus County homeowners owe more on their mortgages than their homes are worth, just-released home-equity data show.
San Joaquin County is almost as bad, with nearly half of all homes “underwater.”
The percentage of homes with negative equity is more than twice as high in the Northern San Joaquin Valley as in the nation as a whole, according to analytic firm CoreLogic.
That more homes are underwater than not doesn’t surprise county residents such as
Danielle Davis. She and her husband bought their Newman home in 2002, before the housing boom skyrocketed, for $198,000. Now, 10 years later, the house is worth $100,000 less.
“We aren’t really in that angry crowd, though,” Davis said. “We’re not happy about the market value, but figure we put ourselves here. We didn’t buy an overinflated home with tricky financing. We didn’t back out of our loan, ruining our neighbors’ property values. … Was it a smart move? Probably not, but we made a commitment. We are doing our best to honor it.”
In Stanislaus County, 51.3 percent of homes — 49,581 in all — have mortgage debt higher than what they are worth. An additional 5.3
percent of homes — 5,119 — are nearly upside down on their mortgages.
In San Joaquin County, 49.6 percent — 62,937 homes — have negative equity. An additional 5.3 percent — 6,694 homes — are near negative.
The data, gathered for the first three months of 2012, show that 23.7 percent of homes nationwide have more debt than value. That’s 11.4 million homes upside down on their mortgages. An additional 2.3 million homeowners had less than 5 percent equity, which means their homes are barely above water.
In California, 30.5
percent of homes have negative equity.
It’s worst in Nevada, where 61
percent of homeowners owe more than their homes are worth.
Still, Stanislaus County ranks the fifth highest in the nation for percentage of underwater homes and second highest in the state, behind Solano County, which has 55.1
percent with negative equity.
Businesses suffering, too
Having more than half of all mortgages in the county underwater has an impact on more than just homeowners. Businesses that traditionally have relied on people’s ability to take out loans based on their equity also are suffering. Home renovation, remodeling and upgrading businesses all have taken a big hit as home values have crumbled.
John Gordon, the second-generation owner of Modesto’s Gordo’s Pool City, said he has seen a precipitous drop-off in people eligible for consumer loans. He said five years ago, he might have 200 people get approved for a loan. Today, it is down to practically none.
“At this point, everyone is paying for it with a Visa or cash,” he said. “We’ve tried to get a few people approved and it’s come back at an extremely high interest rate. Even for people with good credit, the rules change virtually overnight.”
In 2007, the Yosemite Boulevard business closed its Plaza Parkway satellite office in response to slowing sales. But thanks to owning the Yosemite building, Gordon said the business has been able to weather the drop. Other similar businesses, such as Aqua Pool & Spa between Ripon and Manteca, which closed abruptly two years ago, were not as fortunate.
Robert Smits, owner of Modesto’s Village Home & Design Center, estimates his home-renovation business dropped by 50 percent to 60 percent as the housing market crashed. The lack of equity means fewer people are doing the kind of big-ticket $30,000 kitchen and $15,000 bathroom remodels than when home-equity loans were plentiful.
“Five, six years ago, people didn’t even hesitate,” he said. “Having so many people underwater has made a big difference. People used to be willing to spend that equity. Now they’re holding on, if they’ve even got any equity.”
Bee staff writer Marijke Rowland can be reached at firstname.lastname@example.org or (209) 578-2284. Bee staff writer J.N. Sbranti can be reached at email@example.com or (209) 578-2196.
©2012 The Modesto Bee (Modesto, Calif.)
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