A new report from UC Berkeley’s Haas Institute challenges the notion of a national housing recovery. While overall rates of foreclosure and mortgage delinquency have fallen since the height of the housing crisis, many areas of the country have yet to see much improvement, according to “Underwater America: How the So-Called Housing ‘Recovery’ is Bypassing Many Communities.”
At the end of 2013, the report points out, some 9.8 million Americans – more than a fifth of all homeowners with a mortgage – remained underwater, owing more than their homes were worth. Because homeowners with negative equity are significantly more likely to default than are homeowners with positive equity, these findings make it clear that a great many families still face a high risk of losing their homes.
Ten percent of Americans live in the 100 cities with the most troubled housing markets – cities where, according to the report, between 22 and 56 percent of homeowners are underwater. Those cities include Hartford, Conn. (with a 56% underwater rate); Newark, N.J. (54%); Elizabeth, N.J. (52%); Paterson, N.J. (49%); and Detroit, Mich. (47%).
The report also identifies the 15 metropolitan areas and 395 ZIP codes with the highest incidence of underwater mortgages. The hardest-hit zip codes, many with underwater rates above 60%, can be found in Georgia, Michigan, Texas, Nevada, and Connecticut. (See tables of hardest-hit areas.)
The report concludes that far more needs to be done to prevent foreclosures and mitigate the damage to families and communities. It calls for greatly expanded use of principal reduction, recommending several policy paths to that end.
— Rebecca Thiess