Foreclosure Update: Millions Still Underwater!

Even though we reported a couple of weeks ago that the nation’s foreclosure rate was improving slightly, there are still millions of people underwater.

Here are some statistics that define the problem.

• 1% of the population continue to be short on equity
• 1% of the population translates into 4.5M people as of Q4 2017
• 3% home loans are 200% underwater
• 6% is the effective rate of negative equity – any percentage above this number is not good for communities
• Zillow estimates that some 713,000 people owe their lenders AT LEAST twice as much as the value of their property.

Aaron Terrazas, senior economist with Zillow, said, “Although the foreclosure percentages are declining, families continue to be in crisis with stagnant property values. (They are) trapped in their homes with no easy options to regain equity other than waiting.” But, waiting for whom? Waiting for what?

Foreclosures affect individuals AND communities. Hardest hit metros such as Virginia Beach, Baltimore and Chicago are hit hardest by effective negative equity, the lack of sufficient home equity for the communities to essentially pay for costs associated with selling home and buying new properties.

Here are the 10 hardest hit metros by continued foreclosure problems:

1. Virginia Beach 16.7% population 24.6% effective rate
2. Baltimore 14.2% population 44.5% effective rate
3. Chicago 15.5% population 35.8% effective rate
4. D.C. 11.3% population 34.1% effective rate
5. St. Louis 12.0% population 30.9% effective rate
6. Philadelphia 11.6% population 28.8% effective rate
7. Cleveland 13.0% population 28.2% effective rate
8. Cincinnati 9.4% population 27.5% effective rate
9. Minn- St. Paul 6.4% population 26.7% effective rate
10. Atlanta 9.9% population 26.3% effective rate

Here are the least hit metros (in reverse order) by continued foreclosure problems:

1. Seattle 5.0% population 13.9% effective rate
2. Boston 4.4% population       13.7% effective rate
3. Portland 4.0% population 13.5% effective rate
4. Los Angeles 4.7% population 12.2% effective rate
5. San Francisco 3.1% population 8.0% effective rate
6. San Jose 1.9% population 4.8% effective rate