Top 10 Cities Where Homeowners Are Drowning in Mortgage Debt

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Source: Zillow

A rising tide does not necessarily raise every boat — just the ones big enough to catch the waves. Despite a strong rebound in home prices on a national level in recent years, borrowers at the bottom of the market are experiencing a decline in home values. In fact, millions of Americans still remain trapped, underwater with their mortgages.

At the crest of the real estate crisis, more than 15 million homeowners owed more on their mortgages than their homes were worth, placing them underwater (negative equity). Over the past three years, foreclosures, short sales, and rising home prices have freed almost half of these borrowers, but a turning point may be taking place. Instead of steady, gradual improvement, home values are stalling out across various regions of the country.

Nationally, 16.9% of all homes with a mortgage in the fourth quarter were underwater, unchanged from the previous quarter, according to a new analysis from Zillow. Furthermore, the negative equity rate worsened in 21 of the top 50 U.S. markets.

“Higher negative equity rates have become the new normal,” said Zillow Chief Economist Dr. Stan Humphries. “We’ve long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately that’s exactly what we’re seeing. Compounding the problem is the fact that negative equity is decidedly not an equal opportunity predator, and looms larger over the bottom 10% of homes, where homeowners are least prepared to withstand the assault.”

Let’s take a look at the ten most underwater housing markets in America.

Source: Thinkstock
Source: Thinkstock

10. Orlando, Fla.

Negative equity rate: 20.9%

Scott Olson/Getty Images

9. Tampa, Fla.

Negative equity rate: 21.2%

The General Motors (GM) world headquarters is seen February 24, 2013 in Detroit, Michigan. The city of Detroit has faced serious economic challenges in the past decade, with a shrinking population and tax base while trying to maintain essential services. A financial review team issued a finding on February 19 identifying the city as being under a 'financial emergency.' Michigan Gov. Rick Snyder has 30 days from the report's issuance to officially declare a financial emergency, which could result in the governor appointing an emergency financial manager to oversee Detroit's municipal government. (Photo by J.D. Pooley/Getty Images)
J.D. Pooley/Getty Images

8. Detroit, Mich.

Negative equity rate: 21.3%

Jeff Swensen/Getty Images
Jeff Swensen/Getty Images

7. Cleveland, Ohio

Negative equity rate: 21.4%


6. St. Louis, Mo.

Negative equity rate: 22.8%

Source: Thinkstock
Source: Thinkstock

5. Chicago, ILL.

Negative equity rate: 25.1%

Streeter Lecka/Getty Images

4. Atlanta, Ga.

Negative equity rate: 26.1%

A view of the Las Vegas Strip seen before Earth Hour from the House of Blues Foundation Room inside the Mandalay Bay Resort & Casino March 26, 2011 in Las Vegas, Nevada. Hotel-casinos in Las Vegas turned off marquees and non-essential exterior lighting to participate in Earth Hour, a global initiative by the World Wildlife Fund to focus attention on the threat of climate change. (Photo by Ethan Miller/Getty Images)
Ethan Miller/Getty Images

3. Las Vegas, Nev.

Negative equity rate: 26.4%

Scott Halleran/Getty Images
Scott Halleran/Getty Images

2. Jacksonville, Fla.

Negative equity rate: 27.0%

Brendan Hoffman/Getty Images
Brendan Hoffman/Getty Images

1. Virginia Beach, Va.

Negative equity rate: 28.3%

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