California: The New Atlantis?

I have an ongoing project in which “expected relocations” is a variable.  So I’ve been trying to keep tabs on word about just how bad the real estate market has become in certain portions of the country.

One influence on my variable is easy enough to understand: how many people are underwater on their mortgages?  Even if they’re keeping up with the mortgage payments, there is a certain amount of distress in the market brought about by folks who cannot sell their houses because they owe more than the property is worth.

So, this article at Bloomberg caught my eye:

Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.[…]

The highest percentages of homeowners with negative equity were located in California. In four of the state’s metropolitan areas — Stockton, Modesto, Merced and Vallejo-Fairfield — the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said.

In five more California areas — the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera — the percentages were more than 80 percent.

With so many home-owers underwater…is it time to rename California as “Atlantis”?