The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.

About 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to report released Tuesday by housing data firm CoreLogic. That’s up from 22.5 percent, or 10.8 million households, in the July-September quarter.

The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure.

Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.

Roughly two-thirds of homeowners in Nevada with a mortgage had negative home equity, the worst in the country. Arizona, Florida, Michigan and California were next, with up to 50 percent of homeowners with mortgages in those states underwater.

Oklahoma had the smallest percentage of underwater homeowners in the October-December quarter, at 5.8 percent. Only nine states recorded percentages less than 10 percent.

In addition to the more than 11 million households that are underwater, another 2.4 million homeowners are nearing that point.

When a mortgage is underwater, the homeowner often can’t qualify for mortgage refinancing and has little recourse but to continue making payments in hopes the property eventually regains its value.

The slide in home prices began stabilizing last year. But prices are expected to continue falling in many markets due to still-high levels of foreclosure and unemployment.

To read the full story: The Huffington Post

Struggling state and local housing agencies could receive much needed aid to help them continue offering mortgages to low- and moderate- income borrowers, under a program that would provide as much as $35 billion.

The measure would involve the administration purchasing the debt that these housing agencies rely on for financing. The Treasury Department, along with Fannie Mae and Freddie Mac, is expected to buy as much as $20 billion of new housing bonds issued by the state agencies and provide $15 billion in additional funding, as needed, to help the agencies continue to use a type of inexpensive, short-term financing. The measure could be announced as early as this week, and may last for as long as three years. 

http://online.wsj.com/article/SB125409967771945213.html

Existing-home sales in Philadelphia’s eight-county area fell just 0.6% this August, compared to the same month last year, casting some hope for those with homes sitting on the market.

The drop was the smallest year-to-year decline in several months and according to Prudential Fox & Roach HomExpert Market Report, 4,703 homes were sold in the region last month, compared to 4,733 last August.

The positive housing news is being attributed to a rush in first-time home buyers hurrying to take advantage of the credit before it’s too late. Sandy Levenson, an experienced seller said that she can guarantee there will be a lot of settlements on the November 30 deadline.

http://www.philly.com/philly/business/20090925_Existing-home_sales_down_just_slightly_here.html

Many families who poured hard-earned money into renovating their homes, are now facing the harsh reality of drastically declining home values. Expert Matt Russo estimated that real estate value has dropped 18-22% in areas all around the Delaware Valley, especially in the suburbs and valleys.

So what can you do, besides wait for the economy to bounce back? Experts say if you’re trying to sell your home there are a few helpful steps to consider: consult a realtor, get an appraisal before you list, stage your home, and ask your realtor about programs to avoid foreclosure in case you lose your job.

And for those on the fence about buying a home: low-mortgage rates, the First-time Homebuyer Tax Credit, and the Philadelphia Tax Abatement Program all make this a GREAT time to buy.

In a tough economy, homes are certainly not selling as quickly as they once did, but with a little expert advice on home staging, you can boost your home’s value and attract more potential buyers. Put these tips to work, and your house will be flying off the market in no time. For more advice, visit: nbcphiladelphia.com

As interest rates fell below 5% last week, applications for US mortgages jumped to their highest level since late May.

Low mortgage rates combined with high affordability and the $8,000 tax credit for first-time buyers have helped stabilize the housing market, but the tax credit deadline set to end November 30 masks uncertainty about the long-term outlook.

According to the Mortgage Bankers Association, borrowing costs on 30-year fixed rate mortgages averaged 4.97% last week, shy of the all-time low 4.61% set at the end of March, but still well below the year-ago rate of 6.08%.

http://www.reuters.com/article/economicNews/idUSN2338876420090923

Applications to refinance fell 7.4% last week, and home applications fell 10.3%, but total applications were still at one of their highest levels since early June, as buyers hurried to take advantage of the $8,000 first-time home buyer tax credit before the November 30th deadline.

Average rates for 30-year fixed rate mortgage rose to 5.08%, while 15-year fixed rate mortgages and one year adjustable-rate mortgages fell, according to the Mortgage Bankers Association.

http://www.reuters.com/article/economicNews/idUSNYS00541420090916

As more homebuyers see a new home as a place to live rather than an investment, small has become the new big.

Last year, the average size of a new single-family home decreased for the first time in nearly 14 years. According to the Census Bureau, a new home averaged 2,215 square feet last year, down from 2,277 square feet in 2007.

Budget conscious homebuyers have a whole new mentality after the housing bubble burst, and real estate agents and economists say consumers are more interested in containing costs, after watching their investments and retirement plans disappear. Although history has shown that average home sizes decreased in previous recessions, only to creep back up as the economy improved, Kermit Baker, chief economist for the American Institute of Architects says this time, it may be different.

http://www.nj.com/business/index.ssf/2009/09/americans_lose_their_appetite.html

In Atlantic City, home buyers paid an average of $23,082 less than the list price, ranking it among the best cities for negotiating home prices, according to a report released today by Zillow.com. 

Although the practice of haggling is becoming more difficult due to a strong summer selling season, most home buyers are still paying much less than the list price. Of the top 25 cities with the highest average discounts on homes, 14 of them were in Florida. Sellers offered the deepest discounts in Vero Beach, Florida where buyers saved an average of $23,500! 

http://money.cnn.com/2009/09/10/real_estate/negotiating_home_prices/index.htm?section=money_topstories

Since the start of Obama’s $75 billion Home Affordable Program, about 12% of eligible borrowers have begun trial modifications, according to the Treasury Department.

Lenders have offered trial modifications to more than half a million borrowers, but not all who were eligible have enrolled. Mark Zandi from Moody’s Economy.com, said modification progress has improved since earlier in the summer and servicers are better staffed, but it’s slow compared to the surge in delinquencies and foreclosures. In August, one in 357 homes received a foreclosure filing, which is an increase of nearly 18% from last August. For more information on the loan modification program, visit www.makinghomeaffordable.gov or call 1-888-995-HOPE.

http://www.usatoday.com/money/economy/housing/2009-09-09-home-loans-mortgages_N.htm