Minority homeowners in Greater Los Angeles are more likely than local whites to owe more on their home loans than their residences are worth, according to a new analysis from real estate listings site Zillow. But L.A. homeowners overall are in better shape than those elsewhere in the nation when it comes to so-called underwater loans.
The site looked at 2016 TransUnion credit data in U.S. Census Bureau tracts in Los Angeles and Orange counties and in hundreds of markets nationwide to come up with its conclusions. In Greater L.A., 7 percent of homeowners in predominantly Latino neighborhoods and 4.6 percent of homeowners in predominantly Asian-American communities are in underwater home-loan situations, the site found.
That compares with a 4.3 percent underwater rate for homeowners in predominantly white areas. The overall underwater loan rate for Greater Los Angeles is 5.7 percent. When it comes to African-Americans, the site said it did not have enough data on predominantly black tracts to come up with an underwater rate for L.A. However, “5.9 percent of homeowners in neighborhoods with no racial majority are underwater,” according to a Zillow spokeswoman.
Nationally, one in five homeowners in African-American neighborhoods were underwater, Zillow found. “Homeowners in predominantly black communities are twice as likely to be underwater on their mortgages as homeowners in mostly white communities,” according to Zillow.
Nationwide the underwater rate was 9.9 percent for white areas and 12 percent for Latino communities, the site found. There wasn't enough data to determine the Asian-American rate. The overall underwater rate in the United States was 10.9 percent.
Zillow suggests that African-American and Latino neighborhoods never fully recovered from the Great Recession, at least when it comes to housing value. These negative equity rates present “a persistent reminder of the housing crash,” according to the site. “After the housing bubble burst in 2007, homes in predominantly black and Hispanic communities lost more value than those in Asian or white neighborhoods.”
Chicago (17 percent) and Las Vegas (16.8 percent) had the highest underwater rates overall in the nation, according to the data. Predominantly black areas of Chicago had a 28.2 percent negative equity rate; in Vegas, Latino communities saw a 26.5 percent rate.
“Our previous research has shown that negative equity is more concentrated among less expensive homes, and now we know that it is also more prevalent in minority neighborhoods than in white communities, which are also trailing in the overall housing recovery,” Zillow chief economist Svenja Gudell said in a statement. “These gaps can and will have long-lasting implications for growth and equality.”