Chicago Homeowners Are The Most Unfortunate In The U.S.

Underwater mortgages are loans that are higher than the actual market value of the property they are financing, and Chicago has the highest percentage of them among major metropolitan areas in the U.S.

In report issued Wednesday, Zillow Group, Inc. Z ZG stated that Chicago had the largest proportion of underwater homeowners. In a separate research note published Thursday, Corelogic Inc CLGX placed Chicago in the third spot in its list, trailing Las Vegas and Miami.

As readers might figure, there is nothing pleasant about being underwater. Since their houses are worth less than what they owe their lenders, selling their houses would not suffice to cover their debt, let alone to buy a new home or even for a down payment on a new mortgage.

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As per Zillow’s report, more than one out of every five Chicago area homeowners (20.3 percent, to be precise) have mortgages worth more than the houses they live in. While an improvement from last year’s 23.7 percent, this figure is still alarming.

CoreLogic’s figures are somewhat less worrying, but still far from encouraging. The firm calculated that 16.7 percent of Chicago area homeowners are underwater, down from 18.8 percent a year ago.

On a national scale, Zillow said 12.7 percent of homeowners are underwater, while CoreLogic estimates it’s 8 percent of proprietors.

CoreLogic economist Frank Nothaft “attributes the high rate of underwater homes in Chicago, Miami and Las Vegas to the flow of easy mortgage money before the crash. Easy borrowing led to speculation and excessive borrowing. Home prices plunged when the money stopped flowing,” a Chicago Tribune article read.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.