Fewer CT Homes “Underwater” But Improvement Is Slow

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The number of homes with a mortgage in Connecticut that have a loan balance higher than what a property was worth eased a bit in third quarter, compared with the previous three month period, according to a new report Thursday.

Zillow.com, the real estate tracking company, found that¬† 22.9 percent of homes with mortgages in the state, or 156,230, had loans that were “underwater” as of Sept. 30, totaling $10.8 billion. The state’s percentage compares with 28.2 percent nationwide.

Connecticut’s third quarter’s tally, while still high, is down from 24.8 percent in the second quarter and 25.6 percent in the first quarter.

Hartford County was in slightly better shape than the state as a whole. In the third quarter, Hartford County had 35,516 homes with a mortgage underwater, or 21.2 percent of the total. Those mortgages added up to $1.9 billion in negative equity.

While home sales in the state have gained momentum, sale prices still remain weak. In September, the statewide median sale price fell 7 percent, compared with a year earlier, according to The Warren Group. That level represented a decade low for the month of September.

Svenja M. Gudell, zillow.com’s senior economist, told me today that the decline in underwater mortgages is likely being influenced by foreclosed properties being repossessed by lenders, erasing their underwater mortgage status.

The decline in underwater mortgages in Connecticut this year has been slow, nevertheless, Gudell said.

“You’ll see the greatest declines in negative equity as soon as you see sustainable appreciation,” Gudell said.

According to zillow.com, overall property values in Connecticut have fallen 24.1 percent since peaking in December, 2005. That doesn’t mean every property has fallen by that much because there can be wide variations among towns and cities and even neighborhoods.

Gudell said zillow.com has not yet called a bottom to price to declines in Connecticut.

The number of homes in Connecticut that had seriously delinquent underwater mortgages — 90 days or more past due — rose to 11.8 percent in the quarter ended Sept, 30, from 11 percent in the previous quarter, according to zillow.com.

Despite the increase, Gudell said that category of underwater mortgages has been bouncing between 11 percent and 12 percent for a year.











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