‘Seriously underwater’
10 states with the highest share of homes whose owners owe at least 25 percent more than they could get in a sale:
Nevada, 25 percent
Illinois, 23.7 percent
Florida, 23.6 percent
Ohio, 21 percent
Michigan, 20.2 percent
Missouri, 17.5 percent
Georgia, 17.3 percent
Indiana, 17 percent
Maryland, 16.6 percent
Arizona, 15.2 percent
Source: RealtyTrac
If the metro Atlanta housing market has been having trouble gaining speed, it could be because so many homes here are still underwater.
Despite years of choppy improvement, the damage done by the housing crisis continues to be a heavy drag, according to a report released Thursday by RealtyTrac, a California-based real estate research firm.
In metro Atlanta, 17.6 percent of homes with mortgages are “seriously underwater,” the report said, meaning owners owe at least 25 percent more on their mortgages than their homes can bring in a sale.
In addition, 14.1 percent of mortgages are “moderately underwater,” with homeowners owing up to 25 percent more than the home value.
That translates to nearly one-third of all homeowners with mortgages – 368,017 owners, according to RealtyTrac — who are in those categories.
Statewide, the numbers are similar: A total of 32.6 percent of all the homes in Georgia that have a mortgage are underwater, including 17.3 percent “seriously.”
The sliver of good news is that the state figure is down: A year ago, 18.7 percent of Georgia mortgages were seriously underwater.
Higher here
But both the state and metro numbers are higher than the national figure of 13.3 percent of mortgages “seriously” underwater and 26.4 percent, or nearly 15 million homes, underwater to some extent.
The share of underwater mortgages had been falling steadily, but the slide has leveled off, said Daren Blomquist, vice president of California-based RealtyTrac.
“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing,” he said.
When RealtyTrac started tracking the issue in 2013, slightly more than half of all metro Atlanta mortgages were underwater.
The data shows that nearly 40 percent of underwater homes in metro Atlanta were bought between 2004 and 2008, when the bubble reached its peak and then burst. Of metro homes owned for nine years, more than one in five is seriously underwater, the firm said.
The state and region’s shares of seriously underwater mortgages is more evidence of a slow recovery, and of how badly the market was damaged.
Georgia has the seventh-highest share of seriously underwater homes, according to the RealtyTrac. Worst on the list is Nevada with 25 percent of mortgages in that category.
Signs of distress
Foreclosures are a more visible and dramatic sign of distress. When homeowners are unable to make mortgage payments and lose their homes, the losses can leave in their wake, much lower housing values, as well as personal financial disaster.
But underwater mortgages also burden a housing resurgence. That is because few homeowners can take a loss on the sale of a home, so they typically sit tight when they might prefer to sell.
Those who are “seriously underwater” are the least likely to move.
Homeowners who are underwater can also be unable to refinance mortgages to take advantage of low interest rates, or access the value of their homes to pay bills or make improvements.
Underwater mortgages chill the housing market in two ways: affected homeowners are prevented from buying other homes, while their own homes are kept off the market.
The metro market has bounced back in many areas, with average prices rising for several years. But in many places, prices are still far below peak levels before the bubble burst.
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