Misery loves company: negative equity edition

@Barbara: As a longtime New Hampshire resident, I'll admit I'm a bit stumped too. I'll offer a guess that New Hampshire is another one of the states with a heavy influx of people over the last several years, although I don't have population figures handy. But the southern tier of the state has always been a bedroom community for the Boston area, and as home prices in eastern Massachusetts have grown, perhaps this trend accelerated over the last few years. And I confess that the McMansion species seems to have become popular in new construction in the area, which has perhaps led to new residents overreaching.

Curm,
I think you are indeed correct. As the McMansions become exposed for the overreaching palacial luxuries that they are, we are seeing the fall of that subset of the housing asset class. That is precisely why I was able to buy a new Tundra for what I had paid a few years ago for a used Tacoma truck. Supply and consumption can be fooled some of the time, but it can't be fooled all of the time.

Hi Barbara,

I was reading a CNN Money article

http://money.cnn.com/2008/10/30/real_estate/underwater_borrowers/index.htm?cnn=yes

and it suggested that maybe New Hampshire could have experienced the underwater loans because of large immigration influx. Its numbers seemed to be in the ball park as other states with this problem, but far away geographically so I'm not sure.

"The third group of states where many borrowers owe more on their homes than they are worth are in trouble mainly because, according to Fleming, they've experienced a large influx of immigration.

Newcomers in states like Texas (16.5%), Georgia (23.2%), Arkansas (16.3%), and Tennessee (15%) bought homes recently and simply didn't have much time to build up equity before prices started to fall he says."

What do you think?

Sam Spaiser

"Basically what that means is if you want to sell your house, you've got to write a check to the bank on the day you close."

Not if you had a credit default swap.

I noticed a lot of states that people retire to on the list -- are there a lot of older people who bought homes in places like Florida and Nevada among those who are "underwater"?

I think that there was a lot of building in the sun belt areas for the expected demand from retiring baby boomers. There was a lot of speculation by people flipping condos and driving up the price. Some of the places were purchased by retirees and some were still held by speculators who could not sell them as prices fell and the foreclosure rate increased.

Great. Now that we know that one half of Nevadan's are underwater, here's a piece that describes what's going to happen to the other half. Enjoy. See

http://writingfrontier.com/2008/10/31/home-sweet-home/