In the aftermath of the foreclosure crisis, metro Atlanta leads the country with 35% of homeowners underwater on their mortgage loans (Haas Institute, 2014).  Housing recovery in the region has been wildly uneven.  The slow rising tide of home prices in affluent neighborhoods has bypassed large portions of metro Atlanta, particularly communities south of I-20 and along portions of the I-85 corridor. 

Of the top 10 hardest-hit zip codes in the country for negative equity, nine are located in metro Atlanta. The hardest hit zip code in the country is in Clayton County where  a staggering 76% of homeowners are underwater.  In this Clayton community, 89% of homeowners are African American. The impact of negative equity is even more significant given the fact that home equity accounts for 92% of personal net worth for the typical African-American household.

WHY IT MATTERS

Simply put, negative equity destabilizes neighborhoods.  Neighborhoods with high concentrations of underwater homes are at serious risk.  They depress the values of surrounding homes and communities and they undermine the fiscal health of local governments. 

• Homes with negative equity are more likely to go into foreclosure.  Negative equity can create a cycle in which a growing number of concentrated foreclosures exacerbates the decrease in property values, which further weakens the financial condition of neighboring homeowners, which can lead to additional foreclosures.
• Negative equity reduces neighborhood wealth and stability and limits opportunities for homeowners to use home equity to finance retirement and higher education.
• Underwater borrowers spend dramatically less on home maintenance, which contributes to neighborhood destabilization.  They also spend less in the local economy.
• Underwater borrowers often do not pay local property taxes in order to conserve limited financial resources.
• Underwater borrowers can't move to seek new/better job opportunities compounding unemployment rate in Georgia (ranked worst in country, August 2014).