The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Examining the presence of negative equity in the Southeast
Some economists have suggested that houselock—being unable to sell a house because of market conditions and therefore unable to move—may be a structural issue contributing to the high unemployment rate, as people who owe more on their homes than their homes are worth may be hesitant to accept jobs in other areas because of the difficulty or cost of selling their homes.
Negative equity, often referred to as being "underwater" or "upside down," means borrowers owe more on their mortgages than their homes are worth. In looking at the latest negative equity figures, CoreLogic reported that 23 percent of U.S. home mortgages were underwater at the end of fourth quarter of 2010, up slightly from the third quarter.
Looking at the Southeast in particular, the available state-level data indicate the share of mortgage holders in negative equity grew with Florida and Georgia staying ahead of the national share at 47 percent and 30 percent, respectively.
At a more micro level, CoreLogic's data for Core Based Statistical Areas show that in some Florida markets close to or more than 50 percent of borrowers in the market owe more on their homes than the homes are worth.
Clearly, the share of households with negative equity is growing. Whether negative equity is truly an obstacle for employment mobility is a subject of debate, and its role has been called into question by some recent studies. For more on the relationship among negative equity, foreclosures, and the housing market check out our Real Estate Research blog's latest post, "The seductive but flawed logic of principal reduction."
By Whitney Mancuso and Shalini Patel, senior analysts in the Atlanta Fed's research department
TrackBack URL for this entry:
Listed below are links to blogs that reference Examining the presence of negative equity in the Southeast:
- Southeast Manufacturing: Solid as an Oak
- The Fruits of Our Labor
- Tracking Energy’s Trajectory
- Southeast PMI Surges in February
- Tiny Bubbles in Alabama
- Through the Eyes of a Big Fan
- Southeastern Manufacturing Sees No Shadow
- Southeastern Labor Market Continues Strengthening
- A New Year, a Better Economy?
- Florida's Economic Rebound Continues
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- Banks and banking
- Beige Book
- Business Cycles
- Commodity Prices
- Consumer Savings
- Data Releases
- Disaster recovery
- Economic conditions
- Economic Growth and Development
- Economic Indicators
- Fiscal Policy
- Gulf Coast
- Health Care
- Holiday Sales
- Labor Markets
- Local Economic Analysis and Research Network (LEARN)
- Monetary Policy
- Natural Disasters
- New Orleans
- Oil Spill
- Real Estate
- Sales Tax