Underwater mortgages take Q1 dip
Roughly 280,000 South Florida homeowners with a mortgage were “seriously underwater” in the first quarter, though higher home prices continue to restore equity lost during the housing bust, a new report shows.
In Palm Beach, Broward and Miami-Dade counties, 18.5 percent of mortgage holders, or 279,965 people, owed at least a quarter more than the property was worth, according to the Realty Trac foreclosure listing company.
In the first quarter of 2015, 22.7 percent, or 336,746 homeowners, were seriously underwater.
Among the more than 100 metro areas nationwide surveyed by Realty Trac, South Florida ranked 14th in percentage of underwater borrowers. Cleveland was first at 27.1percent.
Meanwhile, the Januarythrough-period saw an increase in the number of South Floridians with at least 50 percent equity in their homes.
In the tri-county region, 24 percent of mortgage holders, or 363,592 homeowners, were considered “equity rich,” Realty Trac said. That’s up from 21 percent, or 304,057 people, in the first quarter of 2015.
Median prices in South Florida were up 10 percent in the first quarter from a year ago, marking the 17th consecutive annual increase, according to RealtyTrac.
“The rising tide is lifting all boats,” said Daren Blomquist, a vice president of the company based in Irvine, Calif.
Some struggling homeowners regained equity quickly because of doubledigit price increases that occurred in 2013 and 2014. But price gains have slowed dramatically in recent months, meaning that people who remain underwater still will have years to wait, said Ken Johnson, a real estate economist at Florida Atlantic University.
“They’re going to have to be very patient,” Johnson said. “It’ll probably be a long
time at 3 to 5 percent annual appreciation for them to be no longer underwater.”
Most underwater owners bought or refinanced from 2004 to 2006 when prices were at or near the peak. After prices plunged, homeowners were stuck with the properties, unable to sell unless they brought thousands of dollars to the closing table.
Some owners walked away and let the homes fall into foreclosure, hurting values of neighboring properties.
Last month, the Federal Housing Finance Agency introduced a program that will forgive principal loan balances for homeowners still struggling with underwater mortgages.
But RealtyTrac said only about 1,800 of the 279,965 seriously underwater mortgage holders in South Florida would qualify for the program, which excludes investors and is designed for people who are at least 90 days behind on their mortgages.
“The vast majority of people who are underwater are still making their payments,” Blomquist said. “They see the market rising and are confident that they’ll eventually regain the equity in their homes.”