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Homes in Black Neighborhoods Twice as Likely to be Underwater as Homes in White Neighborhoods
A new Zillow analysis shows the different effect of negative equity on racial groups in the United States
- Twenty percent of homeowners in predominantly black communities were underwater in Q3 2016, nearly double the national rate of 10.9 percent.
- In half of the largest U.S. metros, homeowners in predominantly black neighborhoods are more likely to be underwater than homeowners in other neighborhoods.
- The negative equity rate in communities where the majority of residents are Hispanic was 12 percent in Q3 2016.
Jan 11, 2017
SEATTLE, Jan. 11, 2017 /PRNewswire/ -- Homeowners in predominantly black communities are twice as likely to be underwater on their mortgages as homeowners in mostly white communities, according to a new Zillow analysisi.
Nationally, the negative equity rate in the third quarter of 2016 was 10.9 percentii. In Census tracts where the majority of residents are black, the negative equity rate was 20 percent, while in tracts where most residents are white, the rate was 9.9 percent. In Census tracts where the majority of people are Hispanic, 12 percent of homeowners were underwater. In places where there was no racial majority, 11.9 percent of homeowners were in negative equity.
Negative equity is a persistent reminder of the housing crash. After the housing bubble burst in 2007, homes in predominantly black and Hispanic communities lost more value than those in Asian or white neighborhoods. While strong home value appreciation during the recovery has helped many homeowners resurface on their mortgage debt, black and Hispanic communities have not had as strong of a recovery.
Underwater homeowners are stuck in their homes, unable to sell except for in a short sale or by paying the remaining balance on their mortgage, and the paralysis has far-reaching effects. When a large share of homeowners can't sell their homes, it limits the inventory of homes for the entire market, leaving fewer options for potential homebuyers.
"Negative equity is not an equal opportunity offender, with certain markets still being more affected than others," said Zillow Chief Economist Dr. Svenja Gudell. "Our previous research has shown that negative equity is more concentrated among less expensive homes, and now we know that it is also more prevalent in minority neighborhoods than in white communities, which are also trailing in the overall housing recovery. These gaps can and will have long lasting implications for growth and equality."
Negative equity is not evenly distributed among homeowners – homeowners in black neighborhoods are more likely to be underwater than any other race in half of the largest U.S. metros.
In Detroit, 12.2 percent of all homeowners were underwater in Q3 2016. However, 35.1 percent of homeowners in predominantly black communities were underwater, compared to 9.5 percent of homeowners in mainly white neighborhoods.
|
Metropolitan Area |
Q3 2016 |
Negative |
Negative |
Negative |
Negative |
Negative |
|
United States |
10.9% |
9.9% |
20.0% |
12.0% |
N/Aiii |
11.9% |
|
New York, NY |
10.0% |
8.8% |
13.9% |
20.6% |
N/A |
12.9% |
|
Los Angeles-Long Beach-Anaheim, CA |
5.7% |
4.3% |
N/A |
7.0% |
4.6% |
5.9% |
|
Chicago, IL |
17.0% |
13.8% |
28.2% |
22.8% |
N/A |
23.2% |
|
Dallas-Fort Worth, TX |
4.4% |
4.1% |
6.2% |
5.7% |
N/A |
4.1% |
|
Philadelphia, PA |
11.8% |
10.1% |
19.6% |
N/A |
N/A |
18.4% |
|
Houston, TX |
6.9% |
6.8% |
8.1% |
6.5% |
N/A |
6.3% |
|
Washington, DC |
12.4% |
9.4% |
19.6% |
N/A |
N/A |
13.6% |
|
Miami-Fort Lauderdale, FL |
10.6% |
7.7% |
16.3% |
11.0% |
N/A |
11.5% |
|
Atlanta, GA |
13.0% |
8.3% |
27.7% |
N/A |
N/A |
12.6% |
|
Boston, MA |
6.2% |
5.8% |
N/A |
N/A |
N/A |
9.9% |
|
San Francisco, CA |
3.7% |
2.5% |
N/A |
7.3% |
3.1% |
4.5% |
|
Detroit, MI |
12.2% |
9.5% |
35.1% |
N/A |
N/A |
N/A |
|
Riverside, CA |
10.5% |
10.5% |
N/A |
10.3% |
N/A |
10.2% |
|
Phoenix, AZ |
11.2% |
10.2% |
N/A |
14.7% |
N/A |
14.2% |
|
Seattle, WA |
6.6% |
6.2% |
N/A |
N/A |
N/A |
8.4% |
|
Minneapolis-St Paul, MN |
7.3% |
7.0% |
N/A |
N/A |
N/A |
11.6% |
|
San Diego, CA |
6.3% |
5.5% |
N/A |
7.0% |
N/A |
6.8% |
|
St. Louis, MO |
12.6% |
10.8% |
28.2% |
N/A |
N/A |
N/A |
|
Tampa, FL |
10.5% |
9.5% |
N/A |
12.7% |
N/A |
14.1% |
|
Baltimore, MD |
14.4% |
11.5% |
22.8% |
N/A |
N/A |
18.3% |
|
Denver, CO |
4.4% |
4.1% |
N/A |
5.7% |
N/A |
5.3% |
|
Pittsburgh, PA |
8.1% |
8.0% |
10.3% |
N/A |
N/A |
N/A |
|
Portland, OR |
3.8% |
3.7% |
N/A |
N/A |
N/A |
N/A |
|
Charlotte, NC |
8.1% |
7.0% |
12.3% |
N/A |
N/A |
10.1% |
|
Sacramento, CA |
7.6% |
6.6% |
N/A |
N/A |
N/A |
9.1% |
|
San Antonio, TX |
10.2% |
8.6% |
N/A |
10.6% |
N/A |
11.1% |
|
Orlando, FL |
11.4% |
9.4% |
20.8% |
14.1% |
N/A |
12.7% |
|
Cincinnati, OH |
10.8% |
10.3% |
19.9% |
N/A |
N/A |
N/A |
|
Cleveland, OH |
14.6% |
11.8% |
36.8% |
N/A |
N/A |
35.0% |
|
Kansas City, MO |
12.4% |
10.5% |
33.8% |
N/A |
N/A |
25.2% |
|
Las Vegas, NV |
16.8% |
13.4% |
N/A |
26.5% |
N/A |
18.0% |
|
Columbus, OH |
9.0% |
8.2% |
19.0% |
N/A |
N/A |
12.0% |
|
Indianapolis, IN |
12.8% |
11.8% |
22.9% |
N/A |
N/A |
18.0% |
|
San Jose, CA |
2.6% |
1.7% |
N/A |
4.4% |
2.6% |
2.5% |
Zillow
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
__________________________________
i To calculate the negative equity rate by race, Zillow examined census tracts in which homeowners of a given race represented the majority of homeowners in that given area. Tracts that had no majority were labeled as 'Mixed' (or 'No Majority' in the output), which was treated it as its own racial group.
ii http://www.zillow.com/research/q3-2016-negative-equity-report-13954/
iii Some regional data is suppressed, because those regions do not have large enough populations of a given race.
SOURCE Zillow
For further information: Lauren Braun, Zillow, press@zillow.com