Greater Greater Washington

Mapping underwater mortgages shows shocking divide

The Washington Post created this astounding map of the places where the greatest percentage of mortgages are "underwater," or owe more than the home's current value.

The Post's article, which talks about how home prices have risen, says:

Many of the homeowners with mortgages higher than their home's value were clustered in the eastern parts of the District and in Prince George's County.
This makes it clear that the economic recovery is not hitting all areas or all people equally. We need more jobs east of the river and in Prince George's County, especially at Metro stations, to help our economic success benefit all.
Support us: Monthly   Yearly   One time
Greatest supporter—$250/year
Greater supporter—$100/year
Great supporter—$50/year
Or pick your own amount: $/year
Greatest supporter—$250
Greater supporter—$100
Great supporter—$50
Supporter—$20
Or pick your own amount: $
Want to contribute by mail or another way? Instructions are here.
Contributions to Greater Greater Washington are not tax deductible.

David Alpert is the founder and editor-in-chief of Greater Greater Washington. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He now lives with his wife and daughter in Dupont Circle. 

Comments

Add a comment »

Predatory race-based lending practices by the scumbag big mortgage brokers, mapped.

by Steve on Jan 14, 2013 2:53 pm • linkreport

On the west side of the region, there is a striking inner-outer divide. Look at Manassas, Sterling, Germantown, and southern and central Frederick County.

by Ben Ross on Jan 14, 2013 2:57 pm • linkreport

That color ramp for the map is kinda misleading until you look at the scale.

by Alex B. on Jan 14, 2013 3:00 pm • linkreport

It's not even just EOTR and PG. If you look at places withing fairfax/arlington/alexandria then the places with the higher percentages are the places with a higher share of minority population. For Fairfax thats along route 1, especially Fort Hunt while in Arlington/Alexandria its the border between the two.

by drumz on Jan 14, 2013 3:00 pm • linkreport

I see Alex's point about the color scale, bit does seem as if the problem is really PG county and a slice of MoCo. DC, even EOTR, isn't that bad off. Although if the percentage of renters there is as high as Marion Barry says, it isn't really an issue...

by charlie on Jan 14, 2013 3:11 pm • linkreport

In addition to the obvious racial issues, the areas that are the most underwater are also the "sprawliest" (i.e. neither walkable TOD, nor the "country estates" of Loudon) The areas with the most underwater houses are the ones with the highest concentration of new-growth suburban culs-de-sac.

This type of community was the most likely to have an massive and irrational run up in prices--not just in the DC area but in many other areas of the country as well.

by oboe on Jan 14, 2013 3:17 pm • linkreport

what a weird map, they have route 50 but not the dulles toll rd (or icc)

by eli on Jan 14, 2013 3:21 pm • linkreport

I agree with Alex B. and Charlie - the choice of colors is kind of weird. Particularly beige for the 30-40% range.

by Frank IBC on Jan 14, 2013 3:25 pm • linkreport

This tells a story, but not the whole story. This needs to be in tandem with how much they are underwater. For example, there are plenty of us that bought EOTR at the height of the market. We are underwater, but not by a significant percentage. With St E's, Skyland & Capitol View many of us should recover in the next 3-6 years. Where as in Prince Georges there are people that are underwater by $100s of thousands with no major development in the pipeline to provide the property bump. In addition, based on the trends of Gen X and the millennial moving to and staying in the city, the Mcmansions, lack of TOD in PG County, makes it look less desirable.

by Veronica O. Davis (Ms V) on Jan 14, 2013 3:25 pm • linkreport

@oboe

except that Loudoun is mostly not country estates - its mostly HOA's with cul de sacs (connected by trails, Radburn style). The success of Loudoun (though in part obviously driven by Dulles Airport, and other favored quarter features) necessarily confuses any "cost of sprawl" lessons in NoVa.

PWC is odd - its doing well in average incomes, but clearly still has large problems.

by AWalkerInTheCity on Jan 14, 2013 3:26 pm • linkreport

It's pretty clear that most of the DC's bad mortgages were EOTR but PG tells a similar story.

If you look at the map of PG, one (if not the) the wealthiest area (Upper Marlboro) didn't make the list.

Predatory lending for sure but the buyer definitely bears a lot of blame here. And for those who had such an orgasmic time blaming "Bush" for all of the country's ails....please take a look at this graph as it explains a whole lot of what happened.

by HogWash on Jan 14, 2013 3:27 pm • linkreport

REminded me of this WaPo article on loans in MD where you don't have to put any money down. http://www.washingtonpost.com/local/a-million-dollar-mortgage-goes-unpaid-for-years-while-couple-fights-foreclosure/2012/03/01/gIQAb4DBpR_story.html

by Arlington on Jan 14, 2013 3:27 pm • linkreport

But I thought we were just supposed to drive until we qualify? Are you telling us that isn't a good idea now?! (/sarcasm)

by Alan B. on Jan 14, 2013 3:31 pm • linkreport

I do fully agree there needs to be better job creation in PG county, however the map to me just shows areas that were more overvalued and that experienced a lot of new development in the mid 2000's, and therefore fell the hardest. I think this is less about being prevalent in minority communities and more about it being prevalent in middle/lower middle income areas of all ethnic/religous types of people.

by Gull on Jan 14, 2013 3:33 pm • linkreport

Hilarious assertion of the day: "We need more jobs east of the river and in Prince George's County, especially at Metro stations, to help our economic success benefit all." As if it were that simple. How about a quick look financials, crime rate, and conviction rates, and you should quickly understand why businesses aren't as interested in moving in, and why the ones that do don't succeed very well.

by Petrus on Jan 14, 2013 3:34 pm • linkreport

Question: would the type of financing have anything to do with my home being somehow more underwater than otherwise?

Example: someone with a 30 year fixed living in bowie (and planning to live in their house) vs. someone with an ARM who bought in Clarendon. Or is that just a corellation that people who couldn't qualify otherwise also happened to be buying mostly in places most affected by the bubble.

by drumz on Jan 14, 2013 3:36 pm • linkreport

Kind of a relief to see my zip code (22205) is the lowest on the list (disregarding those with 0.0%), having just bought my house 3 months ago. I do find it interesting that some of the least dense areas of ArlCo, that are almost exclusively SFHs (22205, 22207, 22213), have numbers under 10%, while areas that are more dense and condo-heavy (22201 for instance) have numbers over 15%. To a degree, it's the same in DC (comparing areas such as Chevy Chase to the West End, for example). Is this just a fundamental difference between condos and SFHs, or does this mean the condo market currently is relatively weak?

by MM on Jan 14, 2013 3:40 pm • linkreport

How about a quick look financials, crime rate, and conviction rates, and you should quickly understand why businesses aren't as interested in moving in, and why the ones that do don't succeed very well.

As if it were that simple. You look back and replace "PGC" with "DC" and essentially have the same argument. For some reason, I'm imagining that DC didn't turn a corner simply because financials, crime and conviction rates got better. Maybe economic investments and other improvements played a role?

It's akin to stating, "well, already know why poor people are poor so stop wondering why there aren't more businesses thriving in those communities."

by HogWash on Jan 14, 2013 3:48 pm • linkreport

MM, that actually is interesting. I wonder whether it was easier to get approved for a condo than a SFH.

by HogWash on Jan 14, 2013 3:51 pm • linkreport

The prevalence of underwater mortgages doesn't necessarily say anything about unemployment levels. Employed people can still be underwater on their mortgage, and unemployed people can still have a whole lot of home equity.

Now, anecdotally, many of those portions with the highest incidence of underwater mortgages are also those places with the highest unemployment levels. But even if we stipulate that, it's a leap from "the people in these communities need jobs" to "there need to be jobs in these communities". There's no guarantee that new jobs in these communities will go to their residents, while some of these communities (especially those in DC) have workable transit connections to existing employment centers and can therefore afford to be less concerned about exactly where those jobs are.

I'm a big fan of smarter transportation, but this map conflates transportation needs with job training needs.

by cminus on Jan 14, 2013 3:54 pm • linkreport

cminus, you're right that you shouldn't simply assume the two are related. But according to the MWCOG, PGC had about 16% of regional households and about 11% of regional jobs in 2010. That is clearly out of balance, especially given the number of undeveloped transit accessible sites. All the other inner suburbs have much better ratios.

by Alan B. on Jan 14, 2013 4:13 pm • linkreport

There are a bunch of different things going on, depending on the submarket, as others have said.

With regard to Ms. D's comment, well, lots of people were underwater in DC from about 1988--the peak of the market--til about 2000, when after a 10 year real estate recession in DC in particular, things started changing. I was underwater for many many years... Now that house is worth lots more. (Too bad I don't still own it.)

But yes, a lot of people bought too high, or kept refinancing.

by Richard Layman on Jan 14, 2013 4:13 pm • linkreport

There's a lot going on in this graphic, and this complexity might explain some of the questions in comments above.

The percentage of houses underwater is the result of many factors. For starters, there's house price appreciation in the boom years and how much house prices then fell in the bust years. It also has a lot to do with when residents bought their houses.

Example: let's take a farther-out ZIP code that only had 1000 houses until developers built 10,000 nearly identical houses during the boom. If we look at that ZIP now, almost every homeowner paid boom prices. Even if house prices fell the same amount in every ZIP, this one's going to look pretty bad.

On top of that, this percentage depends on the kind of financing people were getting. Holding everything else constant, if everyone got 0% down financing, many more of them will be underwater than if everyone put 5% down. Even in boom times, sellers of existing homes are much less likely to consider low-down-payment offers than those with, say, 20% down. But in areas seeing a lot of new construction (like PG county), developers were probably willing to take those buyers, provided they paid inflated prices. And areas filled with historically underserved populations probably experienced much higher rates of low- or no-down-payment loans.

And then there are differences in price trends both during the boom and the bust. David seems to interpret this map as showing local variation in the latter, but I think this dramatically oversimplifies the dynamics behind the actual data. It's actually possible that PG county values could be picking up faster than other areas, but due to all the other factors I mentioned there might still be the pattern you see here. I don't believe this is the case, but I also don't believe that these data show exactly what you think they do.

by Gray's in the Fields on Jan 14, 2013 4:14 pm • linkreport

How about a quick look financials, crime rate, and conviction rates, and you should quickly understand why businesses aren't as interested in moving in, and why the ones that do don't succeed very well.
As if it were that simple. You look back and replace "PGC" with "DC" and essentially have the same argument. For some reason, I'm imagining that DC didn't turn a corner simply because financials, crime and conviction rates got better. Maybe economic investments and other improvements played a role?

It's akin to stating, "well, already know why poor people are poor so stop wondering why there aren't more businesses thriving in those communities."

yes... precisely my point. No simplification works. Neither yours, nor the "opposite".

by Petrus on Jan 14, 2013 4:16 pm • linkreport

The linked Post article has a list of zipcodes with associated percentages of underwater mortgages. Does anyone have zip-code level data for, e.g., unemployment, race, age, and/or education level? I'd love to see which is more tightly correlated.

by Bill on Jan 14, 2013 4:30 pm • linkreport

Another way to read this map would be to say that DC and VA are in a real-estate bubble, and that the cost of housing there is massively inflated.

Speaking from the perspective of a renter, I'm not going to cheerlead for increased property values. Even with the collapse of the nationwide real estate bubble, the cost of housing is still too damn high.

The Maryland map isn't exactly a picture of health, but Virginia and DC are so far on the other extreme that they aren't exactly healthy either (unless you happen to already own a home there).

by andrew on Jan 14, 2013 4:52 pm • linkreport

Was just reading in WP that PGC has shown marked recent improvement in home prices in the last few months.

Also, re crime, PGC just had a 25 year low in homicides.

by H Street LL on Jan 14, 2013 5:08 pm • linkreport

One silver lining is that the people with negative equity in PG Co have lower payments than people who bought homes in more expensive areas. Most bought houses in neighborhoods where they wanted to live, and they are still living there. Many have been able to re-finance, so they have lower payments than when they bought.

PG County has had lower real estate prices than other area jurisdictions for years. That gap declined a bit during the housing bubble, and when the bubble burst prices returned to the historic discount.

The bursting of the bubble means that PG County will continue to be a great place for people with modest means to buy a home. Whether you want a house near a metro station, out in horse country, along tidal water where you can moor a boat, or a short bike ride from the DC line, Prince Georges has the best deals in housing--as long as you don't have school-age children yet.

by JimT on Jan 14, 2013 9:40 pm • linkreport

This is just an income map of DC compiled through underwater mortgages. Wealthier areas have less underwater mortgages than poorer areas. And because in DC, wealth is highly correlated with race, it is also a racial map.

This is just another representation of the inequalities in Greater Washington.

by Jasper on Jan 15, 2013 9:28 am • linkreport

I'm surprised that there aren't more in Prince William, esp. the outer areas. There was lots of spec construction in town house developments that took big nose dives.

by Rich on Jan 15, 2013 4:42 pm • linkreport

As noted above, there's not enough data to draw many conclusions.

Some data points that would be helpful (admittedly beyond the scope of a typical newspaper article):
- How far underwater
- Date of loans
- Initial mortgage or refi
- % down payment when buyer originally purchased
- % owner occupied

Obviously development and the resulting employment opportunities may result in a desirability increase and thereby raising property values (lowering underwater mortgages). But let's face it - just like DC, it's not as if the current residents tend to benefit from such development. They typically will be pushed out to other areas (i.e. DC -> PG County over past decade) as prices rise.

by Bill C on Jan 16, 2013 11:09 am • linkreport

Add a Comment

Name: (will be displayed on the comments page)

Email: (must be your real address, but will be kept private)

URL: (optional, will be displayed)

Your comment:

By submitting a comment, you agree to abide by our comment policy.
Notify me of followup comments via email. (You can also subscribe without commenting.)
Save my name and email address on this computer so I don't have to enter it next time, and so I don't have to answer the anti-spam map challenge question in the future.

or