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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


Examining the presence of negative equity in the Southeast

Some economists have suggested that houselock—being unable to sell a house because of market conditions and therefore unable to move—may be a structural issue contributing to the high unemployment rate, as people who owe more on their homes than their homes are worth may be hesitant to accept jobs in other areas because of the difficulty or cost of selling their homes.

Negative equity, often referred to as being "underwater" or "upside down," means borrowers owe more on their mortgages than their homes are worth. In looking at the latest negative equity figures, CoreLogic reported that 23 percent of U.S. home mortgages were underwater at the end of fourth quarter of 2010, up slightly from the third quarter.


Looking at the Southeast in particular, the available state-level data indicate the share of mortgage holders in negative equity grew with Florida and Georgia staying ahead of the national share at 47 percent and 30 percent, respectively.


At a more micro level, CoreLogic's data for Core Based Statistical Areas show that in some Florida markets close to or more than 50 percent of borrowers in the market owe more on their homes than the homes are worth.

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Clearly, the share of households with negative equity is growing. Whether negative equity is truly an obstacle for employment mobility is a subject of debate, and its role has been called into question by some recent studies. For more on the relationship among negative equity, foreclosures, and the housing market check out our Real Estate Research blog's latest post, "The seductive but flawed logic of principal reduction."

By Whitney Mancuso and Shalini Patel, senior analysts in the Atlanta Fed's research department