Yesterday I posted on Zillow's estimate that one third of Chicago homeowners are underwater on their mortgages - i.e. the homeowners owe more than their homes are worth. Later in the day I had the pleasure of speaking with Keith Jurow who writes for the Real Estate Channel and has also researched the looming crisis in home equity lines of credit (HELOCs). We discussed yesterday's Zillow release and he suggested to me that the Zillow numbers probably don't even reflect the impact of the HELOCs because it's really hard to get your hands on that data. There seems to be a grain of truth to his assumption because the public records on mortgages is really sketchy and fragemented. Any given property will have so many payoffs and refinances and additional mortgages that I don't see how Zillow could correctly reflect the impact of the HELOCs.
If Keith's assertion is correct then the percentage of Chicago homes that are underwater could be seriously understated.