6.3 Million US Homes Are Still Underwater

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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.

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Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Kent

    Every home is eventually headed for tear down. Nobody considers life expectency when they buy a house but they do have one. You can extend it but it doesn’t live forever. At some point, even if it is paid for, it costs more to repair and maintain than it is worth.

  • Tallulah Cusati

    The American government spends BILLIONS of dollars in other countries wars. we shouldn’t be in. Bail out ‘big businesses,’ with BILLIONS, and allow MILLIONS of ILLEGALS to invade our country, for tax payers to take care of, Yet, they refuse to help Americans who are under water on their homes. Help Americans who need jobs, refuse to help the homeless, or to help people with their student loans. When are Americans, who pay the taxes, that pay politicians, millions of dollars, going to come to the front of the line, and get the help they need.