Negative home equity nationwide: Ugly, and getting uglier

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In sheer numbers, California and Florida are the West Coast and East Coast ground zeroes for underwater homeowners. But the horror of negative equity is spreading faster inland, a new study says.

The Calculated Risk blog has a great chart showing the percentage of mortgaged homes with negative equity in 43 states and the District of Columbia, as well as the percentage almost underwater -- defined as homes estimated to have less than 5% equity. Click here for the blog post and chart.

The data come from real estate tracker First American CoreLogic.

‘Going forward, the largest increases in the share of negative equity will most likely occur in states that have not yet experienced deep declines’ in home prices, First American says. ‘The reason: the boom/bust states already have very high negative equity shares and incremental declines in home prices will result in smaller negative equity share increases relative to other states given the same decline in prices.

‘This means that as prices continue to decline in 2009, the rise in the negative equity share of states outside the boom/bust regions will begin to accelerate more quickly relative to the boom/bust states.’

This assumes, of course, that home prices don’t stabilize soon.

Between a spreading wipeout of home equity and the continuing devastation of Americans’ stock portfolios, the government’s $787-billion economic-stimulus program is trying to make up for a loss of wealth many times that size -- and growing.

The U.S. stock market’s value alone has shrunk by $2.6 trillion just since Jan. 1, according to Wilshire Associates.

-- Tom Petruno