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The number of underwater homeowners is decreasing in the Tampa Bay area

 
Published Sept. 16, 2015

The Tampa Bay area still has the nation's highest percentage of underwater homeowners, but the "epidemic" of negative equity is substantially easing.

In the three months ended in June, 20.2 percent of all bay area borrowers owed more than their homes are worth. But that was 3 percentage points lower than in the first part of the year and 6 percentage points lower than at the same time in 2014.

Nationally, less than 9 percent of borrowers were underwater, CoreLogic reported Tuesday.

"For much of the country, the negative equity epidemic is lifting," said Anand Nallathambi, CoreLogic's president and CEO. "The biggest reason for this improvement has been the relentless rise in homes prices over the past three years, which reflects increasing money flows into housing and a lack of housing stock in many markets."

That's especially true in the Tampa Bay area where the number of single-family homes for sale — especially moderately priced ones — is unusually tight.

"Based on months of supply, we're down to a ridiculously low level," said Charles Richardson, senior regional vice president for Coldwell Banker

What economists call a "stabilized" market — one that favors neither buyer nor seller — typically has a six-month inventory of available homes. In Hillsborough, Pinellas and Pasco counties, there's less than three months' supply overall and less than a two months' supply of houses priced under $150,000. That is driving up sale prices in those ranges.

Richardson notes, though, that the current "upward pressure" on prices isn't true for all price categories.

"If you're sitting on a $750,000 or million-dollar house, you've got nine months of supply, which indicates that the pressure on that price range may be going down because there are more sellers than there are buyers," he said. "So you kind of have to segment the market into price points."

Hillsborough, for example, has enough homes priced between $1 million and $2.5 million to satisfy the demand for almost a year. Homes in that range sit on the market for an average of 117 days compared with an average of just 59 days for houses under $150,000.

As rising prices push up home values, fewer Tampa Bay borrowers will be underwater and more will have positive equity. That's good for both the real estate market and the overall economy.

Selling while underwater "would require a very large check at closing so that prevented (some homeowners) from moving up the ladder in terms of housing," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "With regard to the labor market, negative equity is an impediment because even if there's a better job opportunity you're sort of stuck."

An increase in positive equity also spurs consumer consumption.

"As lost wealth is recovering, in many instances that nest egg that five years ago looked like Humpty Dumpty is slowly being put back together again so it makes consumers more willing to spend," Snaith said.

In raw numbers, though, 121,000 bay area homeowners still owe more than their homes are worth. That is one in five of all bay area borrowers, compared to about one in six in the Phoenix and Chicago areas and one in eight in the Riverside-San-Bernardino-Ontario area of California.

In the second quarter of this year, Nevada had the highest percentage of homes with negative equity at 20.6 percent, followed by Florida at 18.5 percent, Arizona at 15.4 percent, Rhode Island at 13.8 percent and Illinois at 13.1 percent.

Texas had the highest percentage of homes with positive equity at almost 98 percent.

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.