www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/15/BULE105CR4.DTL
SFGate Technology: It's a high-tech world - - we just plug you into it... Some nights Sonya Smith can't sleep because she's worried about how she'll make payments on her small home in Oakland's Laurel District. Since getting divorced a couple of years ago, it's much harder to carry the mortgage - and she can't sell because the home's value has declined below the $500,000 she owes on it. "At the end of last year, I looked really hard for a second job, but nothing panned out," said Smith, a technical writer. In fact, about one-seventh of mortgage holders worry they may miss a mortgage payment within the next six months, while 28 percent believe their home's value will decline over the next two years, according to a national poll released Monday. Of people with adjustable-rate mortgages, even more - 36 percent - fear they will not be able to afford their monthly payment if it increases. The Associated Press-AOL Money & Finance telephone poll of 1,002 adults, including 769 homeowners, portrayed a public afflicted with anxiety about what will happen to their pocketbooks in the near future. Those anxieties also show how the slumping real estate market has led to a weakened economy. "One thing this reflects is the general concern about the economy," said Jed Kolko, a research fellow at the Public Policy Institute of California in San Francisco. "Worrying that you can't make your home payment is a statement both about how you feel about the housing market, but also how you feel about your job security, your income." The housing market itself continues to deliver plenty of bad news for homeowners as prices decline, foreclosures increase and for-sale homes stagnate on the market. Hardest-hit The people most affected are those who bought recently with little or no money down. When home values decline, many such homeowners end up "underwater" - owing more than their house is worth. com of Bay Area homes purchased in 2006 during the height of the real estate frenzy shows that in many outlying areas, more than half of such homes are underwater. The negative equity regions closely track to the places where prices have fallen most steeply, such as eastern Contra Costa County, Oakland, Richmond and Solano County. But even in upscale areas like the Peninsula, Marin and Walnut Creek, Zillow's analysis shows that a significant percentage of people who purchased in 2006 now owe more on their house than it is worth. Having negative equity is a big concern because it slams shut the door on refinancing or selling, making foreclosure more likely. "I'm very concerned about the decline in our home's value," said David Peters, an accountant who lives in Hollister (San Benito County). "Prior to the market crash, we had been looking at moving up. Now I don't even engage in the sort of 'house lust' that was so common only a couple of years ago - going to open houses, looking through the newspaper real estate section, dreaming about the possibilities provided by ever-upward spiraling equity." He's also worried about the long-term future, as he had hoped in a couple of decades to sell the home for enough for a comfortable retirement out of state. maybe real estate prices will be more equalized across the country." Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange County, said that while some of the housing fears may be perception rather than reality, that still translates into a real-world impact: People tighten their belts because they feel poorer. "When prices were going up, you thought you were wealthy; Obviously that perception in turn affects spending," he said. Adibi said it's a big deal that 14 percent of mortgage holders are worried about making their payments, as that number clearly encompasses much more than just people who took out risky subprime mortgages. "From 2002 to 2007, the easy lending extended to subprime, and then Alt A, stated income," he said. "People refinanced almost up to 100 percent of the value of their home. They are not necessarily subprime borrowers, but they borrowed the maximum equity they could have. Few likely to buy The poll also showed that 60 percent of respondents said they definitely will not buy a house or condo in the next two years, up from 53 percent when the poll was previously conducted in September 2006. Poll respondents also think that homes are still overvalued. A total of 47 percent - almost the same as 46 percent in 2006 - think the housing market in their area is overpriced. A huge majority - 82 percent - of respondents think it is "very" or "somewhat" difficult for most first-time home buyers to afford a home.
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