Area mortgage outlook sinking

Report says 37% of local borrowers ‘seriously underwater’

9/6/2013

The percentage of Toledo-area homeowners who are “seriously underwater” on their mortgages has risen in the last year and is much higher than the national average, according to California-based RealtyTrac.

The real estate data company defined “seriously underwater” as borrowers who had a loan-to-value (LTV) ratio of 125 percent or more — meaning they owed at least 25 percent more on their mortgages than the properties are worth.

In Toledo, 37 percent of borrowers were seriously underwater, the company said. Last September, it was 31 percent, Realty Trac said.

The national average is 23 percent. The average in Ohio is 31 percent, the sixth highest behind Nevada, Illinois, Florida, Michigan, and Rhode Island.

Among Ohio’s largest cities, Toledo’s percentage is lower than the Akron metropolitan area (39 percent), but higher than Cleveland (36 percent), Dayton (35 percent), Youngstown (29 percent), Columbus (27 percent), and Cincinnati (26 percent).

The cities with the highest percentages are Las Vegas (49 percent), Orlando (43 percent), Tampa-St. Petersburg (43 percent), and Detroit (42 percent).

There was positive news.

RealtyTrac said the number of properties nationwide that had an LTV ratio of at least 125 percent has fallen to 10.7 million — down from 11.3 million in May and 12.5 million in September, 2012.

An increasing number of properties had an LTV ratio of 90 to 110 percent, meaning that they have between 10 percent positive equity and 10 percent negative equity. RealtyTrac says those people are on track to have enough equity to sell sometime in the next 15 months without resorting to a short sale.

“Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months,” said Daren Blomquist, vice president at RealtyTrac. “Homeowners who already have ample equity are quickly building on that equity, while the 8.3 million homeowners on the fence with little or no equity are on track to regain enough equity to sell before 2015 if home prices continue to increase at the rate of 1.33 percent per month that they have since bottoming out in March, 2012.”

About 17 percent of Toledo-area properties fell into this “resurfacing equity” category, according to RealtyTrac.

Twelve percent were classified as “equity rich,” meaning the homeowner had at least 50 percent equity.

Contact Chip Towns at: ctowns@theblade.com or 419-724-6194.