Recent report shows improvement in underwater mortgages

Recent data shows that the number of St. Louis homes considered seriously underwater went down in 2020 from the previous year. While the number remains high, especially compared to other major US metros, the improvement is a promising metric for the local real estate market.

According to research from ATTOM Data Solutions, out of the 678,981 outstanding mortgages in the St. Louis metro area, 54,130 or 8% were considered seriously underwater in the fourth quarter of 2020. This is down from 10.2% in the fourth quarter of 2019, when there were 64,665 mortgages underwater.

ATTOM defines “seriously underwater” as, “[A] combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value.”

By this metric, 3.2 million homes or 5.4% of all outstanding mortgages in the United States were seriously underwater in Q4 2020. Nationwide, this metric has been trending downward over the last few years just as it is in St. Louis, although the local numbers still remain much higher than the national average.

The South and Midwest regions struggle the most, with states like Louisiana, Mississippi, Arkansas, and Iowa having some of the highest percentage of underwater mortgages.

Despite the improvement year over year, St. Louis does stand out negatively in one respect. The ATTOM report states, “Among 8,691 U.S. zip codes that had at least 2,000 properties with mortgages in the fourth quarter of 2020, there were 81 zip codes where at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in Cleveland, OH, and St. Louis, MO.”

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