One in five American mortgages were deemed to be under water in the fourth quarter of 2009, according to Zillow.com today. This stat has many worried that this alone will halt the possible recovery of the real estate market as the percentage of underwater homes rose to 21.4% in the fourth quarter and the Zillow Home Value Index fell 5% year over year, down to $186,200.
“The good news is that, for those markets that will see a double dip in home values before reaching a definitive bottom, this second dip will not be a return to the magnitude of depreciation seen earlier, but rather will look more like a modest aftershock of the earlier downturn,” said Zillow chief economist Stan Humphries according to HousingWire.
Humphries continues, “The prevalence of markets in or near a double-dip situation shows that we are not yet at the bottom, in terms of home values.”
But wait a minute
Zillow calling their own data points definitive isn’t being bought by all industry insiders. Washington D.C. Realtor, Craig Barrett said, “It’s a tough business to call pinnacle points or definitive market movements. I’ve read several opinions that describe market recovery as a W, tilted L or a prolonged U. However, most agree recovery is not a quick rebound such as a V. It is interesting Zillow forecasts a definitive bottom in the 2nd quarter. With Government home buyer programs wrapping up as prices bottom, it may make for opportune conditions for some.”
With foreclosures at historic rates and upset on the Hill (like Barney Frank calling to abolish Fannie and Freddie), no one can be certain of how the market will shake out just as no one was certain that the bottom would fall out. Are you cautiously optimistic or are you going to brace yourself for another rough year?