The percentage of mortgages underwater — when a mortgage exceeds value — has decreased dramatically in South Florida since the Great Recession, meaning the region may be better prepared to weather COVID-19 than the downturn a decade ago.
The St. Louis-based, national real estate agent referral company Clever, analyzed changes in the mortgage market since the Great Recession using data from the Federal Reserve and other sources to determine negative equity rates.
According to Clever researcher Francesca Ortegren, 44% of the tri-county mortgages were underwater in 2010. That compared with 22% nationwide. Miami-Dade was one of the nation’s worst-hit areas.
But today the picture is far brighter. The percentage of homes with negative equity in Miami-Dade, Broward and West Palm Beach was 9% as of 2018. Statewide, only 5.3% of homes are underwater, versus 9% nationwide.
Oretegren credited increased home values for the improvement. The median listing price in the tri-county was $409,950 in 2018, the last year included in the study. That’s a huge leap from 2010, when median home prices were around $106,000 in Broward, $152,000 in Miami-Dade and $159,000 in West Palm Beach, according to Redfin.
An increase in tourism and second-home purchases helped. “The overall economy increase is aligned with home values increase,” Ortegren said. “As you see more tourism and consumerism, that means people there have more money to spend.”
The uncertainty around COVID-19 may change the picture. But the effects, Ortegren said, will not be as dire as the Great Recession. “I don’t think it’s going to be as hard on the housing market because there’s measures in place, such as with banks, because of the Great Recession.”