Even though the Miami real estate market has picked up significantly and we’ve certainly seen progress in certain regions, nationally speaking, the real estate market is not quite there. The reality is there are many metropolitan areas throughout the United States that are still feeling the effects of the real estate bubble. There are still millions of homeowners underwater, meaning that they owe more on their mortgage than their home is worth. Sadly, two of the top five cities for these underwater homes are in the state of Florida, although Miami is not one of them. And, there are millions more not necessarily underwater, but with such little equity they can’t sell anyway.
Interestingly, this glut of negative equity is concentrated in lower-priced homes. Because of this, it can still be rather difficult for a first-time homebuyer to find an affordable property. Depending on the city, the inventory that would normally appeal to first-time buyers isn’t always there. And, many times, the lower-priced properties that are available are listed as short sales or foreclosures, which frequently involve a long, complicated process.
Even though the prevalence of negative equity is far from ideal, much of it is concentrated in areas where prices exploded to epic proportions. As homes continue to sell and prices gradually return to more normal rates, homeowners may begin to see their values climb. This certainly seems to have happened for both Miami single family homes and condos. Anyone underwater who is able to hold onto his or her property should certainly do so for as long as possible. But, for anyone who absolutely must sell, there are more and more options and programs available. Currently, the cities with the most distressed properties are Las Vegas, Atlanta, Orlando, Chicago, and Tampa.