How “underwater” is Reno housing?

Reno Housing Negative Equity

Comparing Reno to other Real Estate Hard Hit Cities

Came across a highly informative post today comparing “underwater cities” — areas with negative equity.

Let’s start with a clear definition of “underwater”:  Negative Equity.  It is a house where value is less than what’s owed on the mortgage.  If I was to sell a house at negative equity it would look something like this:

  • Money owed on the principal: $200,000
  • Current value of the house: $130,000
  • Negative Equity: $70,000

The above chart shows Reno as one of top cities with the most negative equity.  (Quick rabbit trail: This is the first time I saw the fundamental “negative difference” in our real estate markets between North (Reno) and South (Vegas) — Reno: 55%, Vegas: 73%.)

Some excerpts from the above post I found interesting:

  • The above map clearly shows where the real negative equity is.  The entire state of California and Florida is virtually in a deep negative equity position.
  • The worst market in terms of negative equity is Las Vegas.  Nearly 73 percent of all loans are underwater!  This is simply incredible.
  • The total property value of mortgaged Las Vegas property is $73 billion.  At the same time, there are $96 billion in loans outstanding on these locations.
  • Negative equity is the aphrodisiac to strategic defaults and more foreclosures.  Given the above data and the research on negative equity, we can expect foreclosures to be dominated by these markets.