Despite years of improvement, about one in every ten mortgaged homes in metro Atlanta is still “underwater,” according to a report issued this morning by a California real estate data firm.
More than eight years after the burst of the housing bubble in metro Atlanta and more than three years after average prices in the market began moving up, 9.7 percent of the region’s mortgages are in negative equity – that is, the owner owes more on the property than the home is worth on the market.
Roughly 115,500 homes were underwater during this year’s third quarter, according to CoreLogic’s report.
But that is a whole sight better than it was, and the improvement of late has been steady, if modest: A year earlier, 165,307 – 13.9 percent of all mortgaged homes – were underwater.
A large number of homes with negative equity is both a symptom of weakness in the market and a reason that improvement will continue to be slow. Homeowners who are underwater are unlikely to sell. That keeps inventory — the number of homes for sale – down, which keeps many other potential buyers from either entering the market or moving up to a more expensive home.
Moreover, negative equity dampens a homeowner’s personal spending. That is partly by a negative “wealth effect,” the way that a consumer’s sense of well-being is supported or undermined by his home’s value.
But it is also because the homeowner cannot use home equity as a source of money. And that limits spending — especially on big expenses. The continued rise in home prices is seen as good – if modest – news for homeowners and the economy in general.
“Homeowner equity is the largest source of wealth for many Americans,” said Anand Nallathambi, president and CEO of CoreLogic. “The rise in home prices, expected to be at least 5 percent in 2016, will continue to build wealth and confidence across America.”
Nationally, 8.9 million of the more than 50 million homes with a mortgage have less than 20 percent equity, according to CoreLogic. Just over 8 percent of all mortgages nationally are still underwater: 4.1 million properties.
Among the states, Georgia currently ranks tenth in the proportion of mortgages that are underwater.
The state most-burdened by negative equity is Nevada, where 19 percent of all mortgages – that is, nearly one of every five mortgages – is underwater, according to CoreLogic.
As the new year approaches, things are continuing to look up. Jonathan Smoke of Realtor.com calculated the number of page views for various markets and culled out a top ten that should lead the nation in sales over the coming year.
Atlanta had the fifth-strongest outlook.