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Cities Seeing Increase in Underwater Homeowners

Overall, house prices are rising in the U.S., but homeowners are falling behind in many American cities. In 21 of the largest 50 U.S. housing markets, the number of people who owe more on their home than their home is worth has increased. However, nationwide, there have been slightly better conditions. Last year, about 16.9% of all mortgaged homes were underwater in the fourth quarter of last year. Real estate analysts said that the normal share of underwater borrowers is usually about 5%. Negative equity has continued in many markets even though hoe values have continued to recover following the housing bubble bust in 2008. Overall, national home values rose 5.9% in 2014. The problem seems to be that while overall housing values are rising, the low end of the market has continued to see housing values decline. To combat this growing issue, the Federal Housing Administration, which typically caters to lower-income borrowers, lowered fees for mortgages with down payments around 3.5%. These moves began in the past few early months of 2015.


  1. oliver2 oliver2

    Perhaps low end homes are seeing a decline in values despite national trends, because the recovery has not touched those who would buy low end homes as strongly.

  2. grieve grieve

    I agree with Oliver, I think the recovery has yet to reach those who would buy low end homes in a significant way, as the wealth gap has been increasing in certain areas while per capital wealth has increased.

    That said, I was hoping this blog was going to be about people buying homes that were literally being built underwater.

  3. wintera15 wintera15

    I think the retirement of the baby boomers will also play a part in this issue. They will be downsizing and putting their homes in the suburb on the market while the millenials are fighting for apartments in the cities.

  4. winn winn

    The article points out that in 21 of the 50 largest housing markets, the number of households ‘underwater’ has risen. I wonder if there is any relationship between these particular housing sectors — what exactly is driving this increase? Do you think that these areas have experienced exceptionally low levels of economic production?

  5. For data see a quarterly report put out by CoreLogic. You can also get select data by state from their free (abbreviated) quarterly report. Unfortunately they don’t appear to have done it prior to 2010 so you can’t get a time series leading up to and then through the bubble.

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