Home prices are rising in the US but the rate of home owners who owe more on their mortgage than their homes are worth is stalled and even worsening in some places for the first time since the recession, according to a new report.
Negative equity is going up in 21 of the largest 50 housing markets, indicating many underwater homes are not rising in value, says the latest review from real estate data firm Zillow.
More than a quarter of mortgaged homes are underwater in some markets in Florida and the Midwest. The national negative equity rate is 16.9% yet home values rose 5.9% nationally last year.
The report also shows that the at the lower end of the market homes are far more likely to be worth less than the balance of their mortgage and the analysis suggests that is because low end homes are losing value.
At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, but now that trend has reversed in many metros.
Indeed, three years into the recovery, home values overall continued to recover while owners of the lowest valued homes, those most likely to be stuck in negative equity, were left behind.
‘Higher negative equity rates have become the new normal. We’ve long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately that’s exactly what we’re seeing,’ said Zillow chief economist Stan Humphries.
‘Compounding the problem is the fact that negative equity is decidedly not an equal opportunity predator, and looms larger over the bottom 10% of homes, where home owners are least prepared to withstand the assault,’ he added.
In Atlanta some 49% of homes in the bottom third of home values are in negative equity, compared to 11% of mortgaged homes in the highest valued third. Among large metros, Virginia Beach at 28.3%, Jacksonville at 27%, Las Vegas at 24.4% and Atlanta at 26.1% had the highest rates of negative equity.
BOOKMARK THIS PAGE (What is this?)
Source: Property News Spain