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LOS ANGELES COUNTY MORTGAGES ARE ‘SERIOUSLY’ UNDERWATER LOS ANGELES COUNTY MORTGAGES ARE ‘SERIOUSLY’ UNDERWATER

BRIANA FRAZIER

Attom Data Solutions reports that about 1.9% of the Los Angeles county mortgages are “seriously underwater” at year’s end despite a healthy economy and a booming real estate market.

In the last quarter of 2019, LA county had 29,871 underwater homes. To arrive at this figure, Attom tracked what it perceives as the most troublesome home loans; mortgages that are 25% greater than the value of the home. While this figure seems like a lot of troubled home loans, data shows that the county’s share of seriously underwater mortgages was sixthlowest among the 50 populated U.S. Counties.

An underwater mortgage refers to a home purchase loan with a higher principal than the free-market value of the home. It is a situation that normally occurs when the value of the property is falling. In this situation, the homeowner may not have an equity available fo the credit, which in most cases limits the homeowners from seeking options like refinancing or selling the home unless they have the cash to pay the loss out of pocket.

Underwater mortgages were a common problem for most homeowners at the height of the financial crisis of 2007-08, which among other things involved a substantial deflation in the housing prices. While the market has recovered, partly due to the support from the monetary policy and interest rate stabilization, the underwater mortgage still remains a factor that property owners must follow closely when making real estate investments.

If the economy sours, or if the homeowner’s finances are stretched, there is very little financial motivation keeping the borrower in these homes. The challenges that we mainly see in the underwater statistics highlight the lingering value issues from the financial crisis as well as the more recently reduced values of the high-end housing.

In the last quarter of 2019, California’s total recorded seriously underwater homes were 189,896. Which means 2.7% of all mortgaged properties, third-lowest nationwide. By Attom’s Data calculations, 7% of mortgages in the rest of the U.S. are seriously underwater.

At the neighborhood level in LA county, the pricier the community the more likely the higher chances of seriously underwater homes. Shortages of affordable residences have kept the low-end prices stronger than the bulk of the market. In addition, cheaper homes are often bought with large downpayments o in all-cash deals creating high levels of equity.

The following is a list of numbers and share of seriously underwater mortgages in 238 big LA County ZIP codes and how the percentage is ranked among 979 California ZIPs tracked by Attom

1. Malibu 90265: 499 seriously underwater home loans or 11.81% of all mortgaged homes — No. 977 statewide.

2. Beverly Hills 90210: 437 or 10.71% — No. 975 statewide.

3. Santa Monica 90402: 217 or 7.61% — No. 958 statewide.

4. Los Angeles 90077: 170 or 6.84% — No. 948 statewide.

5. Los Angeles 90049: 437 or 5.58% — No. 901 statewide.

6. Pacific Palisades 90272: 280 or 4.83% — No. 869 statewide.

7. Los Angeles 90046: 295 or 4.40% — No. 844 statewide.

8. Los Angeles 90068: 241 or 4.39% — No. 842 statewide.

9. Manhattan Beach 90266: 391 or 4.11% — No. 825 statewide.

10. West Hollywood 90069: 216 or 4.06% — No. 819 statewide.

11. Los Angeles 90027: 172 or 3.91% — No. 810 statewide.

12. Los Angeles 90019: 230 or 3.47% — No. 763 statewide.

13. Los Angeles 90003: 239 or 3.42% — No. 754 statewide.

14. Encino 91436: 145 or 3.36% — No. 746 statewide.

15. Los Angeles 90004: 132 or 3.34% — No. 738 statewide.

16. Los Angeles 90048: 118 or 3.29% — No. 728 statewide.

17. Calabasas 91302: 213 or 3.26% — No. 725 statewide.

18. Hermosa Beach 90254: 158 or 3.24% — No. 723 statewide.

19. Compton 90220: 240 or 3.20% — No. 713 statewide. 20. Los Angeles 90037: 159 or 3.19% — No. 712 stateide.

219. Covina 91722: 73 seriously underwater home loans or 1.03% of all mortgaged homes — No. 89 statewide.

220. Paramount 90723: 58 or 1.02% — No. 88 statewide.

221. El Segundo 90245: 32 or 1.01% — No. 87 statewide.

222. Torrance 90505: 74 or 1.01% — No. 84 statewide.

223. North Hills 91343: 96 or 1.00% — No. 83 statewide.

224. Long Beach 90810: 54 or 1.00% — No. 82 statewide.

225. Panorama City 91402: 70 or 0.99% — No. 80 statewide.

226. Pico Rivera 90660: 108 or 0.99% — No. 79 statewide.

227. Mission Hills 91345: 35 or 0.96% — No. 76 statewide.

228. Pacoima 91331: 128 or 0.95% — No. 75 statewide.

229. West Covina 91790: 79 or 0.92% — No. 70 statewide.

230. Torrance 90504: 60 or 0.90% — No. 66 statewide.

231. Sun Valley 91352: 59 or 0.86% — No. 64 statewide.

232. Downey 90242: 52 or 0.83% — No. 61 statewide.

233. Los Angeles 90056: 18 or 0.83% — No. 59 statewide.

234. San Fernando 91340: 39 or 0.80% — No. 53 statewide.

235. Monterey Park 91755: 36 or 0.79% — No. 51 statewide. 236. Los Angeles 90022: 48 or 0.75% — No. 44 statewide.

237. Inglewood 90304: 17 or 0.74% — No. 42 statewide.

238. Culver City 90230: 50 or 0.68% — No. 35 statewide.

Sources & Works Cited https://www.whittierdailynews. com/2020/02/14/29871-los-angelescounty-mortgages-are-seriouslyunderwater/ https://www.investopedia.com/ terms/u/underwater-mortgage.asp