35% of California Homes with Mortgages Are Underwater

According to a recent report from First American CoreLogic, 35% of California homes with mortgages were underwater as of September, 2009. Results were generally better in the Bay Area, although not in the East Bay.


There's no mystery about why so many homes in the East Bay are underwater. Prices there have fallen further than in the other regions.


Note: I don't have aggregate price indexes for the regions shown in the First American report, so I just showed the component counties.

The number of underwater homeowners continues to grow. (See this map for numbers from November, 2008.) As I mentioned in an earlier posting, the number of foreclosures is likely to continue growing as well.

Nation's Housing Prices Were Flat in September

The Case Shiller home price indexes for September were released today. The 20-city composite index was essentially unchanged from the prior month. Ten of the twenty cities actually fell during September. That represents an unpleasant reversal from the August result, when 17 of the cities rose. There are plenty of reasons to question the recent gains in housing prices. We may already be seeing signs that those gains are not in fact sustainable.

The Bay Area seems to be faring better than the nation as a whole, with September prices rising by 1.3% compared to August. Bay Area home prices are now about 14% higher than they were at their March lows, although they are still almost 40% lower than they were at the peak of the bubble.