Fewer Atlanta Homeowners Underwater -from bizjournals.com
The U.S. negative equity rate is dropping, but 43.1 percent of Atlanta homeowners with a mortgage are still effectively underwater, according to the first quarter Zillow Negative Equity Report.
Seattle-based Zillow Inc. (NASDAQ: Z) reported Atlanta’s negative equity rate dropped to 23.2 percent in the first quarter from 26.1 percent in the fourth quarter of 2014. This was the biggest quarter over quarter improvement in negative equity of the 35 metros included in the analysis. A year ago, the rate was 33.6 percent.
At the end of the first quarter, the cumulative amount of negative equity in the metro area is $15.858 billion.
Spring and summer are the busiest buying and selling seasons, and this year, there is high demand for homes in the bottom third of the market. However, a disproportionate number of those homeowners are simply stuck in their homes and can’t afford to sell to buyers looking for homes in their price range.
The rate of underwater homeowners is much higher among the homes with the least value. In Atlanta, 46. percent of homes in the bottom third are in negative equity, compared with 20.2 percent in the middle third, and 10.1 percent in the top third.
“It’s great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it’s likely they may not re-gain equity for up to a decade or more at these rates,” Zillow Chief Economist Dr. Stan Humphries said in a statement. “And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt. Potential first-time buyers have difficulty finding affordable homes for sale because those homes are stuck in negative equity. And owners of those homes can’t move up the chain because they’re stuck underwater in the entry-level home they bought years ago. The logjam at the bottom is having ripple effects throughout the market, and as home value growth slows, it will be years before it gets cleared up. In the meantime, we’ll be left with volatile prices, limited inventory, tepid demand, elevated foreclosures and a whole lot of frustration.”
Among the 35 largest housing markets, Las Vegas, Chicago and Atlanta had the highest rates of homeowners in negative equity.