1 in 7 homes in Santa Clara County is "underwater"

This is pretty shocking... A recent news report shows that 1 in 7 homes in my hometown (San Jose, which is part of Santa Clara County) have property values "underwater" as a result of the current housing recession. In other words, 1 in 7 homeowners' home values are below what they owed on their mortgages.

Here's a map showing areas of Santa Clara County most affected by homes going "underwater" (click image to enlarge). I am from 95120, which has been minimally affected. Not sure why but most of the hardest hit areas happen to be on the east side. Go figure.

Thankfully, this does not equate to 1 in 7 homeowners cannot pay their mortgages and are foreclosing.

However, this may mean that the underwater phenomenon increases the chances that some owners, finding themselves with no equity to protect, will stop paying their mortgages and face foreclosure. Other owners under pressure to sell their homes quickly will be forced to do so at a loss. For the rest, who can keep paying the monthly mortgage bill, the effects of an underwater mortgage may be minor, if depressing. No owner enjoys losing equity, but many will be able to hold on until the day rising values replace some of what was lost.

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