In the St Louis area there were 44,674 (7.9 percent of all residential properties) with negative equity, or underwater, during the 4th quarter of 2015, according to a report just released by Corelogic. This is a decline of 18.6 percent from the year before when there were 54,604 St Louis homeowners in a negative equity position (9.7 percent of all residential properties) .
Wha is negative equity or being “underwater’
For homeowners considered to be in a negative equity, or underwater, position, means that the current balance of their home mortgage exceeds the current value of their home making it impossible to sell their home without bringing money to the closing table. This takes many would-be sellers out of the market as, even though they may like to sell their home and buy another, they just don’t have the cash available to cover the shortfall on their sale as well as cover downpayment and closing costs on a new home. Hence, one of the reasons for the low inventory of homes for sale in many parts of the St Louis area.
Near negative equity can prevent owners from selling as well…
In addition to the 44,674 St Louis homeowners that are currently in a negative equity position, there are an additional 16,720 homeowners (3.0 percent of the total in St Louis) that are in a “near-negative equity” position meaning that, while they are in a positive equity position, they are at risk of going into a negative equity position of home prices fall and most likely do not have enough equity in their home to cover the typical costs of a home sale and move to another home.
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