Underwater Mortgages in Georgia Soar in 4th Quarter of 2010

Posted by Jeff Aughey on Thursday, February 10th, 2011 at 11:34am.

I am frequently asked, "When is our Alpharetta and Johns Creek real estate market going to get better?"  There is no concrete answer, but one trend we need to see is an increase in home prices so that the number of underwater mortgages is reduced. Why is this so critical?  Many current homeowners would love to take advantage of the great home values available today and move up to a more expensive home while interest rates are still low. But, with the value of their own home down, they can't make that move. The current high level of underwater mortgages is a key factor that keeps the Atlanta real estate market mired in sluggishness. (An "underwater mortgage" means that the amount of the outstanding loan is greater than the value of the home.) A recent article from CNBC states that the number of underwater mortgages increased from 23% to 27% between the third and fourth quarters of 2010. Georgia has 3 out of the top 30 counties in the United States with the highest rate of underwater mortgages (see chart)... and they are all in the Atlanta Metro area. Paulding County comes in at number 25 with 47.5% underwater, Henry County is number 20 with 48.8%, and Clayton County made it all the way to number 7 with 56.1% of all mortgages underwater. Clark County in Nevada is number 1 with 71.1% of its mortgages currently "upside down" -- to give you a little perspective outside of our state.  for some perspective. So what factors will help home prices increase?  Supply and demand laws will lead us. (They always do.) We need a lower supply of foreclosure and short sale homes on the market and a greater number of qualified buyers looking for homes. What is the single biggest factor that will dramatically help achieve these goals? JOB CREATION! If unemployment rates fall, fewer homes will end up in foreclosure and better employment numbers mean more people will qualify for a new mortgage. Current market conditions do indicate a slow improvement in the job outlook as our economy recovers. Unfortunately, slowly improving employment numbers means a slowly improving real estate market. Bottom line - don't expect our market to improve rapidly but always keep in mind that great opportunities exist in any market. All the best,  Jeff

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