Center for American Progress

RELEASE: 7 Years After the Housing Crash, Nearly 1,000 U.S. Counties Present Increasing or Stagnating Percentages of Underwater Homes
Press Release

RELEASE: 7 Years After the Housing Crash, Nearly 1,000 U.S. Counties Present Increasing or Stagnating Percentages of Underwater Homes

Washington, D.C. — A comprehensive new analysis released today by the Center for American Progress reveals that more than seven years after the housing crash, nearly 1,000 U.S. counties continue to present increasing or stagnating percentages of underwater homes. There are also 600 additional counties that are beginning to see some improvement, though they still feature high percentages of underwater homes. This positive trend could be derailed if there is an uptick in the number of foreclosures in these counties.

CAP’s report finds that many of the counties that are experiencing an increase in their percentages of underwater homes tend to be located in nonmetropolitan areas, which are less likely to have the resources necessary to speed a full housing recovery. There are also counties located in metropolitan areas where the number of underwater homes is beginning to decline but where far too many homeowners still owe more on their home than it is worth in today’s housing market.

As part of the analysis, CAP also released a new interactive that shows how the negative equity crisis between 2011 and 2015 typically has been concentrated in certain areas of the country, as well as how its evolution has followed different geographic patterns. The interactive also includes negative equity information for the 2,037 U.S. counties for which data are available, classifying each county into one of six distinct categories depending on its current negative equity rate and changes in the percentage of underwater homes over time: robust; rebounding; stable; stagnant; slipping; or sinking.

“More than seven years after the housing bubble burst, there are still hundreds of counties across the United States where significant numbers of underwater homes exist,” said Michela Zonta, Senior Policy Analyst at CAP and co-author of the report. “While negative equity across the board has decreased since 2011, what these data tell us is that the crisis has not eased in all corners of the country, and policymakers need to pay close attention to these areas.”

CAP’s report examines the course of negative equity at the county level nationwide and provides an account of the characteristics of counties that have experienced a decrease in the incidence of negative equity compared with those where negative equity rates are stagnating or getting worse. The analysis reveals that the negative equity crisis is a dynamic phenomenon, as it varies in magnitude and impact over time. It also shows that trends in negative equity are consistent with trends in other socioeconomic indicators, as changes in negative equity rates are significantly correlated with variations in household formation, job growth, and income levels. Finally, CAP’s analysis finds that renter affordability is a growing problem for the large majority of counties as a result of the pressure on the rental market generated by the foreclosure crisis.

While different counties present varying challenges to policymakers and others seeking to push the United States toward a full housing recovery, CAP’s report presents a series of actionable steps that could be undertaken in order to help those counties with high percentages of underwater homes. These recommendations include:

  • The Federal Housing Finance Agency and the Federal Housing Administration should promote neighborhood stabilization efforts and foreclosure prevention.
  • Congress should support the development of affordable rental housing programs that provide local governments with sufficient resources to help meet local rental affordability challenges.
  • Policymakers should implement specific policy interventions for the revitalization of rural areas experiencing increases in negative equity.
  • More negative equity data need to be made available in order to identify and monitor local markets that are economically stagnant and still present high levels of negative equity.

Click here to read “The Uneven Housing Recovery” by Michela Zonta and Sarah Edelman. Click here to see the related interactive map.

For more information on this topic or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.

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