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Zillow: 12.1% of Charlotte homeowners are underwater

Foreclosures, short sales and rapidly rising home values have lifted millions of Americans previously underwater on their mortgages since the end of the housing crisis.
Foreclosures, short sales and rapidly rising home values have lifted millions of Americans previously underwater on their mortgages since the end of the housing crisis. tsumlin@charlotteobserver.com

Despite housing market gains since the end of the recession, millions of Americans still owe more on their mortgages than their homes are worth. In Charlotte, the so-called negative equity rate remains elevated but is still a bit better than the national average.

In the second quarter of this year, 12.1 percent of Charlotte homes with a mortgage were in negative equity, according to a report this week from Zillow, an online real estate marketplace. The national negative equity rate, by comparison, was 14.4 percent.

Zillow found that 21.3 percent of condo owners in Charlotte were underwater on their mortgages, above the national rate of 19.3 percent. Among Charlotte’s lowest priced homes, those in the bottom third in value, 20 percent of homeowners were underwater, compared with 24 percent nationally.

Negative equity is a lingering effect of the housing crisis that ended six years ago. Foreclosures, short sales and rapidly rising home values have lifted millions of Americans previously underwater on their mortgages, Zillow wrote. During the recession, the bottom tier homes were the ones most likely to be in negative equity, and they continue to be the ones most likely underwater today.

“If the overall negative equity rate is going to continue to fall, it will need to keep being driven down by improving health at the bottom end of the market,” said Zillow’s chief economist Svenja Gudell said in the report.

Quickly rising home prices in Charlotte should boost underwater homeowners here. Home prices in June rose 5.2 percent from the same month a year prior, slightly faster than the national average rate. Charlotte’s low supply of homes for sale drives up prices as new residents flock to the region.

In the report, Zillow also said Las Vegas, one of the cities hardest hit by the housing crisis, had a negative equity rate of 25 percent in the second quarter, the highest of any of the largest U.S. metros. At 3.4 percent, San Jose, Calif., had the lowest rate.

Katherine Peralta: 704-358-5079, @katieperalta

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