Forget owing more than your home is worth -- many have already paid more than it's worth.
Hundreds who bought homes just six years ago have already made enough payments to buy their homes outright at their current values.
Almost all of those payments, though, have taken the form of interest. These same residents often still owe about twice what their homes are worth.
The ranks of such unfortunate homeowners will probably grow sharply during the next year as their payments continue amidst declining prices.
Take homebuyers in the city of Sacramento: The median price of a home here in 2005 was $356,000. Someone who bought at that price with a 30-year loan at 7 percent interest with 10 percent down has made about $184,000 in payments, including their down payment. They still owe $298,000 on their loan principal. And their home is worth about $150,000.
In a "normal" real estate market with price appreciation of 4 percent each year, homeowners with a 7 percent interest, 30-year loan would never cumulatively pay more to the bank than their home is worth.
Thousands of these homeowners have already lost their homes or walked away from their loans; it’s unclear how many are left paying their loans. Many took loans with worse terms than stated above.
Much of the region’s economy nonetheless depends on those still plugging away at their loan principal, and whether they will keep making payments, despite such ugly numbers.
This chart shows the median home price by place in late 2005 and mid-2011, according to real estate tracking firm Zillow.com. It also shows, roughly, the amount of payments made so far on a home bought in late 2005 and the amount of principal still to be paid, assuming a 30-year loan with 10 percent down and a 7 percent interest rate.
Notes: All figures nominal; not adjusted for inflation. "Payments to date" includes down payment.
Source: Bee research; Zillow.com
• Read more articles by Phillip Reese
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