HOUSTON – Real estate data provider CoreLogic and the Houston Business Journal report that 12% of homes in the Houston area have mortgage values that exceed their actual value. It also indicates that another 5.9% are nearing the point at which they will be classified as “upside down.” The negative equity situation is due to foreclosures according to the report.
Mark Fleming, chief economist of CoreLogic stated, “Negative equity continues to both drive foreclosures and impede the housing market recovery. With nearly 5 million borrowers currently in severe negative equity, defaults will remain at a high level for an extended period of time.”
Similarly, the Dallas Business Journal reports that more than 14% of homes in the Dallas area are “underwater”, i.e. the mortgage value exceeds the actual value. Another 7.3% are nearing the point of being upside down.
The Atlanta Business Chronicle reports that 28% of Georgia homeowners are upside down. Nationwide 23% of homeowners owe more than their home is worth. Nevada ranks highest in negative equity with 68%, followed by Arizona at 50%, Florida at 46%, Michigan at 38% and California at 33%.
I bought a home in Houston back in the 1980s during the Reagan deregulation frenzy and within a year of purchase I discovered that my home was worth 50% of the price I paid for it.
What does this mean for working people? For me, it represented a loss of mobility. Even though I got hired for jobs in other parts of the country, I was not free to accept those positions because I could not sell my house. I was literally stuck in a house and a job that I did not want.
People these days who find their incomes being lowered due to the current financial crisis may not be able to keep up with their mortgage payments. They do not have the option to sell their house, so that it goes into foreclosure if they cannot pay for it. As a result, the bank picks up a house for virtually nothing after receiving payments for several years. Of course, the hapless home owners who made their payments were not paying towards their equity, but were merely bilked by this get rich quick scheme for the banks.
Does swindling people out of their homes and hard earned wages meet the standards of “Life, liberty and the pursuit of happiness”? It does for the banks, but not for working people. Working people need a government of the people, by the people and for the people that will step in and rectify these great injustices being perpetrated on them by financial institutions. As Woody Guthrie sang, “Some people will rob you with a handgun and some will rob you with a fountain pen.”

James Thompson