Actually, surprise really is not the correct term. A number of people and rating agencies have stated for about a year that by 2011 one in four mortgages would be underwater – that is the borrower owes more than the property is worth.

First American CoreLogic, a real estate information company, now says that 10.5 million households have negative equity in their property. For those who claim the residential real estate market have bottomed, think again. Let us deal out a few reasons why.

The case for the next leg down in real estate

1. Foreclosures are making record highs each month. This means there will continue to be extra inventory on the market, pushing down prices
2. People with negative equity – especially large amounts – will start walking away from their property (see point number 1)
3. $110 Billion in Adjustable Rate Mortgages will reset in the next two years. Seeing a large portion of borrowers cannot refinance as it is, a wave of ARMs resets will cause pressure on borrowers again leading to people being unable to pay their mortgage.
4. Unemployment is expected to remain high over the next several years. If jobs are hard to come by, how can people pay their mortgage? (again, see point 1)

What I find interesting is that 11% of people who took out mortgages in 2009 ALREADY owe more than what their property is worth. If that is not a sign that the market continues to trend downward I don’t know what is.

This news surprises me a bit. 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure, but guess what is the driving force?

Individuals with “prime” mortgages:

An industry report shows that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit.

The Mortgage Bankers Association said Thursday the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure.

California, Nevada, Arizona and Florida accounted for 46 percent of new foreclosures in the country.

I guess the mantra of “only the foolish borrower” is at fault is out the window. Oh, and just so you know – this means 1 in 8 with mortgages are late/in foreclosure.

I want you to take two minutes to watch this video…

So, there are 137 pages of foreclosures listed in the Wayne County paper. I wanted to figure out how many that comes out to so I did a bit of research. According to foreclosure.com, Wayne County has 6,677 properties in forclosure.

My first reaction is WOW! That is a lot of property. So, what about where I am, what about Cook County…. well, Cook County has 10,842 properties in forclosure. Wayne County doesn’t look so bad any more, but wait.

Look at more of the evidence.

Wayne County has 1.9M people living within it’s borders, Cook has about 5.3M people. That means there is 1 forclosure for every 284 people living in Wayne County, where as Cook County has 1 for every 488 people.

The unknown is how many foreclosures does Wayne County has in a normal market? It looks like they may really be hurting, but is this far from the average?