Nearly One-Third of Americans Live in Counties Where One in Five Homeowners is Underwater: Heat Map

A high percentage of homes with negative equity, or underwater, is a lingering legacy from the recent housing and foreclosure crisis. Although these underwater homes are not as direct of a threat to the housing market as foreclosures, they are hobbling the housing recovery by preventing many homeowners (17 percent of all homeowners with a mortgage nationwide) from participating in the market.

In a normal, healthy market these homeowners would typically become move-up buyers after roughly six years of owning, and the homes they sell would become inventory for many first-time buyers entering the market.

But that normal flow is being disrupted by homeowners with negative equity who are holding back from becoming move-up buyers, which in turn is impacting the availability of inventory downstream for first-time homebuyers.

Analysis description and findings
For this analysis, RealtyTrac looked at 1,137 total counties with equity data available out of 3,143 counties total (36 percent). These counties had a combined population of 258,459,942, out of a total nationwide population of 309,138,711 (84 percent).

For each county we looked at the percentage of homes with a mortgage that were seriously underwater (for our purposes defined as a property with a loan to value ratio of 125 percent or more) as of the end of the first quarter of 2014. The percentage of seriously underwater is the key metric driving the heat map, and the attached spreadsheet is also sorted by this metric, from highest to lowest.

We also added in some related metrics: unemployment rate as of December 2013, annual home price appreciation in February, and average LTV of all homes in the county.

Counties with at least 20 percent of homeowners seriously underwater
This analysis found 241 counties where 20 percent or more of properties with a mortgage are seriously underwater. This represented  21 percent of all counties with data, and those counties had a combined population of nearly 79 million, 31 percent of total population of counties with data.

The bottom line: nearly one in three Americans live in markets where at least one in every five homes with a mortgage is seriously underwater.

Counties with at least 25 percent of homeowners seriously underwater
There were 136 counties where 25 percent or more of properties with a mortgage are seriously underwater. Those counties represented 12 percent of all counties with data, and those 136 counties had a combined population of nearly 50 million — 19 percent of total population for counties with data available.

The bottom line: nearly one in five Americans live in counties where one in every four homes with a mortgage is seriously underwater.

 

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