Over 35 percent of California homeowners are in a negative equity position or near negative equity (within a 5 percent range). This is an enormous number of mortgage holders:
What this translates into is 1,880,000 California mortgage holders have no equity in their home. They are essentially in a worse position than a renter and could be deep underwater if they used one of the common toxic mortgages that we are all so familiar with. Many of these people would walk today if given the chance or if forced to pay their mortgage. Psychologically it would make sense. Take the hit, rebuild your credit, and buy a home in this much cheaper environment.
Some in California keep talking about the million dollar market. Last year 22,000 homes sold for $1 million or more in the state. That is great but California sells about 546,000 homes a year. So now that we’ve addressed 4 percent of the market, what about the other 96 percent? Bubble markets have a long way to go before any bottom can be called.
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