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Front page of the Arizona Daily Star yesterday reports:
Tucson home loans: 40% ‘underwater’
More than 40 percent of single-family-home owners in the Tucson area owed more on their mortgages than their homes’ value at the end of March, real estate tracking firm Zillow.com reported Monday.
Home values continued to drop as foreclosures drove down prices, and more than one in four Tucson-area homes sold in March went for a loss, the firm reported.
Waterfall but NOT under water
The headline is about Tucson home loans. But the first sentence changes to single-family-home owners. There are a lot of single-family-home owners in Tucson that don’t have a mortgage. They “OWN” their home. Those home OWNERS are not calculated in this equation even though the way it is written you would think they are “underwater”.
Therefore, lets stick with 40% of home loans in Tucson are underwater. Did you know that about 40% of Tucson home loans have been underwater for several years.
Because it was possible to buy a home with no money down, get two loans on the property, (A first and a second) and make interest only payments. This meant you were not paying any principle off on the property. Taking into account the costs of purchasing the home were also rolled into most of those loans it means they were upside down (or underwater) from day one.
It was much higher than 40%. We are down to 40% because of all the homes that have already gone into short sale or foreclosure are no longer in that category.
For the past year between 30 and 48% of the homes sold have been either Short Sale or REO properties, none of those are currently going to be in the “Under water” category. Which leads us to the next point.
“more than one in four Tucson-area homes sold in March went for a loss”
Actually, the number is higher than 1 in 4. Here is how we know.
In March there were 1204 closed transactions in the Tucson MLS. of those 108 were Short Sales; 320 were REO (Bank Owned Homes). That’s 428 properties sold at a loss. This represents 35.54% of the closed transactions in March. They should have said more than 1 in 3 homes sold went for a loss.
But those homes sold in March at a loss are not upside down. None of the homes sold in the past year at a loss are upside down either.
Consider the Source
My mom always used to say to us as kids when we came home from school with some juicy tale going around school. “Where did you hear this from?” Then she would say, “Well, consider the source”.
I once wrote saying Zillow was only for FUN being like a ouija board. Then again in February, last year I wrote this post about the Arizona Daily Star using Zestimates. Take a second and read that second post. Zestimate is a made up word. . . can you see where that is going?
Want more? Here are the search results for Zillow like a Ouiji board Read a few of those.
Does this sound like a credible source?
Add the source to the logic being used in this report and what do we have? Typical journalism for today. Make a Headline, throw out some numbers, get a few opinions, shake in some shoddy analysis, bake it for awhile and we have FRONT PAGE NEW. News? Please.
