6.3 Million US Homes Are Still Underwater

What's Hot


Shoppers Boycott Businesses Selling Trump-Branded ProductsBusiness

5 Reasons to Shop for a Home in DecemberFamily

Giving Thanks: Why Foreigners Find America AmazingAround The House

Why Washing Your Turkey Can Make You IllFamily

50 Best Gifts Under $25 for Everyone on Your ListFamily

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

What the Richest 1 Percent Earns in Every StateFamily

10 Ways to Retire Earlier Than Friends on the Same SalaryGrow

The 10 Best Ways to Blow Your MoneyCredit & Debt

7 Foods That Can Lengthen Your LifeFamily

The 50 Hottest Toys of the Past 50 YearsFamily

7 Government Freebies You Can Get TodayFamily

Although the number of underwater homes has declined by half, data show that homes in the lowest price range are still drowning disproportionately in negative equity.

Las Vegas is No. 1, but not in a good way. Sin City tops the list of cities with the largest percentage of underwater homes in the country, Time says.

Underwater is when you owe more on the home than it’s worth. According to The Associated Press, nearly 1 in 3 homes in Vegas is underwater. While that sounds bad, it’s a marked improvement from last year, when nearly half of Vegas homeowners owed more than their homes were worth.

Driven by an increase in home prices, the number of underwater homes in the U.S. has decreased by half since late 2009, MarketWatch said. In 2013, more than 3.5 million homes actually regained equity.

Although many underwater homes are finally coming up for air, 6.3 million remain underwater. According to NBC News, more-affordable homes are three times more likely than expensive homes to be underwater:

“The unfortunate reality is that housing markets look to be swimming with underwater borrowers for years to come,” said Zillow chief economist Stan Humphries. “It’s hard to overstate just how much of a drag on the housing market negative equity really is, especially at the lower end of the market, which represents those homes typically most affordable for first-time buyers. Negative equity constrains inventory, which helps drive home values higher, which in turn makes those homes that are available that much less affordable.”

Thirty percent of homes in the bottom tier ($98,400 and under) are underwater. In comparison, about 18.1 percent of the middle tier ($90,300 to $306,700) and 10.7 percent of the top tier ($306,700 and up) are in negative equity.

Last week we discussed the trend for contractors to build bigger, more expensive homes. That, coupled with millions of underwater homes, creates a volatile housing market, which effectively prices out many consumers. According to NBC:

For the housing recovery to get moving again, first-time homebuyers need to step in where investors are stepping out. In order for them to get in, they need to find affordable homes, and that is where supply is sorely lacking. Home builders are focusing on larger, higher-priced homes, because that is currently where the buyers are.

Unfortunately, some areas of the U.S. housing market aren’t recovering as well as others. Nevada, Florida, Mississippi, Arizona and Illinois are home to almost one-third of all underwater homes in the U.S.

Have you been in this situation? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 12 Ways to Get Good Furniture Cheap

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,813 more deals!