The 10 Cities With The Most Underwater Mortgages

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Photo: roger4336 via Flickr

Last week, President Obama announced he would extend the mortgage refinancing program in an effort to provide relief to homeowners whose mortgages are worth more than the value of their homes.Nationwide, one in four homeowners with a mortgage — 11 million households — has an underwater mortgage. The problem is even worse in some areas of the country.

Click here to see the most underwater cities >
24/7 Wall St. has identified the 10 cities with the most underwater mortgages.

Most of the cities on our list are in regions worst hit by the housing crash. These areas are all in California, Florida or the Southwest — all of which were booming housing markets before the recession hit.

In the U.S., just fewer than 15% of homes were built in the last 10 years. But in some of the cities on our list of highest underwater mortgages, that number is 25% and higher.

The high supply may have contributed to the sinking home values in those cities. In the case of Las Vegas, house prices have dropped by roughly 60% from peak prerecession values, and they continue to drop to this day.

In the cities with the most underwater mortgages, home prices have dropped by an average of 8.42%, and as much as 14% in the past 12 months.

To make matters worse, the employment situation in these metropolitan areas is in worse shape than in most of the country. This is partially the result of a once-booming construction industry that has since collapsed. Of the 10 regions on this list, nine have an unemployment rate that is higher than the national average of 9.1%. Many of the regions have unemployment rates that are some of the worst in the country, such as Modesto and Stockton, California.

Using data obtained from housing data and analytics firm CoreLogic, 24/7 Wall identified the 10 regions built around an urban centre — core-based statistical areas — with housing markets that had the highest per cent of homes with underwater mortgages.

This data was compared to the number of sales of homes that had been repossessed, known as REO sales, and distressed sales (sales by homeowners who could not continue to make mortgage payments) for the same regions. Unemployment data was obtained from the Bureau of labour Statistics. Data on homes built since 2000 was obtained from the U.S. Census Bureau.

These are the American cites sunk by underwater mortgages →
This post originally appeared at 24/7 Wall St.

10. Bakersfield-Delano, California

Pct. homes underwater: 48.75%
12-month home price change: -9.58%
Homes built 2000 or later: 21.1%
Unemployment: 14.4% (tied for 11th highest)

Nearly 50% of the homes in the Bakersfield-Delano metropolitan area are currently underwater. In the past 12 months, homes have lost nearly 10% of their value, much more since the housing market first collapsed.

Distressed sales have accounted for more than half of total sales in the past year, likely because of the difficult economic conditions in the region. To make matters that much more difficult, the area has an unemployment rate of 14.4%, the 11th highest in the country.

Source: 24/7 Wall St.

9. Lakeland-Winter Haven, Florida

Pct. homes underwater: 50.33%
12-month home price change: -4.59%
Homes built 2000 or later: 25.2%
Unemployment: 12.1% (30th highest)

The metropolitan area of Lakeland-Winter Haven is located in central Florida. Due in part to the development of retirement communities across the state, more than one in four standing homes have been built since 2000, compared to a national average of just 14.9%.

Like most of the rest of the state, the region has been hit hard by the recession. To date, more than half the area's mortgages are underwater, over 21% of housing units are vacant, and a total of 35.06% of home sales in the past year have been distressed.

Source: 24/7 Wall St.

8. Port St. Lucie, Florida

Pct. homes underwater: 50.89%
12-month home price change: -4.68%
Homes built 2000 or later: 25.2%
Unemployment: 12.8% (22nd highest)

Nearly 18% of the homes sold in the Port St. Lucie region in the past 12 months have been properties that were originally foreclosed upon.

Just about 35% of home sales in the past year have been distressed sales. The region has an unemployment rate of 12.8%, the 22nd highest in the country, and a median household income of $41,346, nearly $9,000 lower than the national average.

Source: 24/7 Wall St.

7. Vallejo-Fairfield, California

Pct. homes underwater: 53.29%
12-month home price change: -10.5%
Homes built 2000 or later: 14.1%
Unemployment: 11.6% (40th highest)

Despite the area's exceptionally high median household income, the Vallejo-Fairfield metropolitan area's housing market is suffering on all fronts. Home prices have dropped 10.5% in just 12 months. Just over 14% of homes in the area were built in 2000 or later.

Additionally, 60.57% of total sales in the past 12 months have been distressed sales, the second greatest rate among metro areas on this list.

Source: 24/7 Wall St.

6. Modesto, California

Pct. homes underwater: 53.30%
12-month home price change: -9.22%
Homes built 2000 or later: 18.3%
Unemployment: 16% (6th highest)

In the past 12 months, home prices in Modesto have dropped more than 9%, one of the contributing causes of the 53.3% of the region's mortgages to be underwater. As proof of the high level of foreclosures that has occurred in recent years, more than 40% of last year's home sales were properties that had been foreclosed upon by a lender and resold.

Of the 372 areas considered by the Bureau of labour Statistics, Modesto has the 6th highest unemployment rate in the country. At 16%, it is nearly double the national average.

Source: 24/7 Wall St.

5. Orlando-Kissimmee-Sanford, Florida

Pct. homes underwater: 53.42%
12-month home price change: -3.14%
Homes built 2000 or later: 27.7%
Unemployment: 10.3% (83rd highest)

More than one in four houses in the Orlando-Kissimmee-Sanford metropolitan area in Florida was built in 2000 or later. Now, 20.7% of all housing units are vacant. Nearly three-quarters of occupied homes have a mortgage on them, far above the national average of 67%.

At 10.3%, Orlando's unemployment rate is significantly higher than the national average, and its median household income is about $3,500 less than the national average. These figures will make recovery even more difficult for the region.

Source: 24/7 Wall St.

4. Reno-Sparks, Nevada

Pct. homes underwater: 53.74%
12-month home price change: -14.19%
Homes built 2000 or later: 21.8%
Unemployment: 13% (20th highest)

Home prices in the Reno-Sparks area have declined 14.19% in the past 12 months alone, one of the highest rates of decline in the country.

To date, more than 53% of mortgages in the region are underwater, and nearly one out of every five homes sold in the past year have been a short sale, meaning homeowners still owe money to lenders even after selling their property. The unemployment rate in the region is 13%, the 20th highest rate among all metropolitan areas in the country.

Source: 24/7 Wall St.

3. Stockton, California

Pct. homes underwater: 53.89%
12-month home price change: -6.46%
Homes built 2000 or later: 19.9%
Unemployment: 16.1% (5th highest)

The Stockton area is located in central California. Many of the jobs in this area are on farms. These positions are rarely permanent and employment in the region has dropped dramatically since the recession began.

Currently, the metro area has one of the highest unemployment rates in the country -- 16.1%. The percentage of home sales in the past 12 months that have been distressed sales is one of the higher rates in the country -- 53.45% -- and the rate of short sales is nearly 20%. Nearly one in every five homes in the metropolitan area was built in 2000 or later.

Source: 24/7 Wall St.

2. Phoenix-Mesa-Glendale, Arizona

Pct. homes underwater: 53.96%
12-month home price change: -9.81%
Homes built 2000 or later: 28%
Unemployment: 8.4% (202nd highest)

Compared to most of the other regions on our list, residents of the Phoenix-Mesa-Glendale metro area are actually doing relatively well. The unemployment rate of 8.4% is historically high for the region but well below the national average. The region also has a higher median income than the U.S. median. Nevertheless, nearly 54% of all mortgages are underwater, owing in part to a nearly 10% decline in home values in the past 12 months. Half of all home sales have been distressed sales, and more than 30% of sales have been of homes that were recently repossessed.

Source: 24/7 Wall St.

1. Las Vegas-Paradise, Nevada

Pct. homes underwater: 63.96%
12-month home price change: -12.07%
Homes built 2000 or later: 35%
Unemployment: 14.2% (tied for 11th highest)

Almost two out of every three homes with a mortgage in the Las Vegas-Paradise metropolitan area is underwater. This is, by far, the highest rate in the country, and it is 10 percentage points greater than the metro area with the second highest rate.

The past decade brought an exceptional amount of growth to the region's housing market, with 35% of homes being built in 2000 or later. Currently, 16.9% of housing units are vacant, while 79% of occupied homes have a mortgage. In the past 12 months alone, home prices have dropped over 12% in Las Vegas-Paradise.

Source: 24/7 Wall St.

The American Cities Where Mortgages Are Staying Afloat

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