Despite several years of improvement in the housing market, metro Atlanta ranks third in the nation in the share of homeowners who still owe more on their mortgage than their homes are worth.
According to a study released today by Zillow, 17.6 percent of metro Atlanta homeowners still have negative equity, also described as being “underwater.”
That means that – at best – those owners would break even if they sold their homes. More likely, it would cost them money to sell the home. Nearly 37 percent of homeowners are effectively underwater, that is, “they don’t have enough equity to comfortably cover the costs of selling their home and buying a new one,” according to Zillow, a Seattle-based real estate data firm.
Sometimes, when a homeowner desperately wants to sell and there isn’t much hope that values will rebound soon, a bank agrees to a “short sale” in which the lender accepts whatever price the house brings in the market as payment for the mortgage.
But none of those options is attractive, so few underwater homeowners will chose to sell unless they need to. Moreover, the farther underwater, the less likely a short sale.
And nearly 15 percent of those who are underwater in Atlanta owe twice as much on their mortgage as the home is worth, Zillow said.
All of this contributes to a longstanding problem with Atlanta’s real estate market: there just aren’t enough homes for sale.
“As we move into the home shopping season, inventory is already low, and negative equity is keeping potential additional stock from becoming available,” said Svenja Gudell, Zillow’s chief economist. “Things are moving in the right direction, but some owners are still deeply underwater.”
Without a doubt, things in the region have come a long way: At one point after the housing crash, virtually all mortgages in metro Atlanta were underwater. And even two years ago, nearly one-in-three homeowners had negative equity.
Atlanta's housing market was among the hardest-hit in the crash and recession. And Atlanta's improvement has paralleled the advance of other markets.
Now, only Las Vegas and Chicago have a higher share of negative equity than Atlanta.
Nationally, 13.1 percent of homeowners are underwater. During the past year, improved real estate values pulled about 2 million homeowners back above water, according to Zillow.
Highest metro rates of homeowners with mortgages who were “underwater” at the end of 2015:
Las Vegas 20.90%
Chicago 20.50%
Atlanta 17.60%
Baltimore 17.40%
Cleveland 17.10%
St. Louis 17.00%
Kansas City, MO 16.40%
Detroit 16.10%
Orlando 15.40%
Washington, DC 15.30%
Phoenix 15.20%
Philadelphia 15.00%
Tampa 14.70%
Indianapolis 14.60%
Source: Zillow
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