South Florida’s underwater homes are drying out

A 2012 photo of the Brickell skyline taken from the Rickenbacker Causeway (Credit: Daniel Christensen)
A 2012 photo of the Brickell skyline taken from the Rickenbacker Causeway (Credit: Daniel Christensen)

The number of South Florida homeowners who have mortgages larger than their home’s value is shrinking, thanks in part to rising home prices across the board.

Data from a year-end RealtyTrac report shows that about 19.6 percent of all South Florida homes with a mortgage were underwater. That equates to 296,838 properties spread throughout Broward, Palm Beach and Miami-Dade counties — a 2.3 percentage point decrease from the third quarter of 2015.

South Florida homeowners were stuck with upside-down loans when the real estate market crashed in the late 2000s. Their home values tanked, leaving them with loan balances higher than their properties were worth.

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Then in 2013 and 2014, home prices shot upward as the housing market picked up speed. Now, South Florida ranks 14th in the nation for underwater homes.

The country’s worst hot spot was Las Vegas, where 159,832 homes — or about 27.7 percent of all the region’s residential properties — are seriously underwater.

“Over the past three and a half years, the number of seriously underwater properties has been cut in half, but we continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory,” Daren Blomquist, RealtyTrac’s vice president, wrote in the report. “At the other end of the spectrum, the growing number of equity rich properties reflects a moribund move-up market and restrained leveraging of home equity by U.S. homeowners.” — Sean Stewart-Muniz