Nearly a decade after buying her home, Jennifer Dewan feels trapped in it.
The first-grade teacher paid about $175,000 for her Fairburn home during the housing boom and then, when the bubble burst, watched powerlessly as values plunged below what she owed on her mortgage.
She stuck it out and kept up with her monthly payments, but the rebound in values since then has yet to undo the damage.
Dewan is one of the tens of thousands of metro Atlanta homeowners or families still “underwater,” or owing more than their home is worth, in the wake of the housing bust that still scars the region.
Experts say large numbers of underwater homes hurt neighborhood property values. They also burden the economy by depressing both job mobility and the “wealth effect,” or the consumer spending spurred by growing assets such as equity in a home. At worst they lead to foreclosures that can ruin personal credit.
Dewan, 59, said she’d still have to bring a lot of cash to the closing to pay off her mortgage.
“The homes in the area are selling for $145,000 to $150,000. Sure I’d sell and try to buy something else in a nicer neighborhood if I could. I feel very trapped.”
An estimated 14.3 percent of mortgages in metro Atlanta are still underwater, according to Attom Data Solutions, the California-based provider of property data. That represents 168,374 households.
And that is after years of dramatic improvement.
“I would estimate the share of seriously underwater homes in Atlanta was above 50 percent in the first quarter of 2012, when median home prices bottomed out in the metro area,” said Daren Blomquist, vice president at Attom Data.
Metro Atlanta ranks 30th worst out of of 90 metro areas, according to Attom. At the top is Cleveland, with 27.5 percent of homes seriously underwater, or with loans of 125 percent or more of the home value.
The region’s average home price has risen more than 60 percent since 2012, according to the Case-Shiller Index, but such gains are far from consistent across the metro area.
Dewan recently became one of more than 5,000 people who have applied so far to a program offering one-time cash boosts to get underwater homeowners closer to the surface.
The Underwater Georgia program has about $110 million in U.S. Treasury Department funds but is administered by the state Department of Community Affairs.
It sounds like a lot, but it is not enough to erase the problem, said attorney Sarah Bolling Mancini of the Decatur office of Atlanta Legal Aid, which helps people trying to save their homes from foreclosure.
“Not everyone, but a lot of the people who are struggling, are underwater,” she said. “There are many more homeowners who are underwater than the program could help.”
Carmen Chubb, deputy commissioner of housing for the state Department of Community Affairs, said the money is fixed and “We want to help as many people as we can.”
If dispersed evenly among 3,000 people, the money would amount to $36,666 a piece, but amounts vary by circumstance. The money is administered as a five-year loan, with one-fifth of the amount forgiven each year.
Conditions are attached. For example, homeowners who have fallen behind on mortgage payments, or who own multiple properties, would not be eligible. Also ineligible are people who’ve received help making payments from a separate state program called Home Safe.
Phyllis Atchison, 63, will likely not qualify. Neither will her mother, 85. Both own underwater homes in Southwest Atlanta. Each of the women owns an investment property in the area as well, and they too are underwater, Atchison said.
“They tell me my house is worth only about $75,000. The balance on the mortgage is $100,000,” Atchison said. “I refinanced in 2007 and took cash out to buy the rental property.”
She figured she would make a lot of money selling it in a few years, but her timing was unlucky.
“I tried to sell right before the market fell and I had an offer for $320,000 but it fell through,” she said.
Underwater homes are typically lower-priced, partly because homeowners with limited resources were so tempted to refinance and take out cash when home prices were climbing.
“This does slow the market a little bit,” said Charlotte Sears, president of Coldwell Banker Residential Brokerage. “It takes inventory off the market because there are houses that can’t be sold. It is not our only problem with having enough inventory, but it certainly doesn’t help.”
As things improve, some sellers inflate the asking price if they need a little more to pay off the mortgage, she said. “No one is going to pay 25 percent more. It’s an exercise in futility for everyone.”
Among Atlanta homes in the lower third of prices, 32 percent are underwater, said Svenja Gudell, chief economist at Zillow, a Seattle-based real estate information company.
“Normally when people move up to higher-priced homes they free their homes for first-time homebuyers. And that cannot happen.”
With enough time, the market will heal as values rise and the underwater crisis evaporates, Gudell said. “In the meantime, it is casting a relatively long shadow.”
Among those in the shadow is Jacqueline Atterberry.
Atterberry, 51, had her townhouse built in 2007 in the Cascade area of south Atlanta and moved in the following spring.
“I was so excited, the first in my family to be a homeowner,” she said. “And of course, everything went bust a month or two later.”
With prices dropping, homes around her falling to foreclosures and her interest rate climbing, Atterberry negotiated a loan modification to cut her payments. Despite losing a job, she kept making those payments. But she still owes $110,000 — about twice the current home value.
The state’s new program holds out hope, she said. “I really like my home. I can’t imagine walking away.”
Though falling, metro Atlanta’s share of homeowners with bigger mortgages than home values remains historically high. Here are the percentages for the past four years:
2016: 14.3 percent
2015: 17.6 percent
2014: 20.2 percent
2013: 33.8 percent
Source: Attom Data Solutions
Note: Data shown for 2nd quarter of each year
Percentage of ‘seriously underwater’ mortgages, with a loan equal to 125 percent or more of the home value, by county:
Clayton: 41 percent (14,435)
Cobb: 10 percent (16,500)
DeKalb: 22 percent (30,955)
Fulton: 16 percent (34,899)
Gwinnett: 9 percent (14,926)
Source: Attom Data Solutions
‘Seriously underwater’ mortgages in the U.S., with a loan equal to 125 percent of more of home value, by year:
2012: 28.6 percent (12.8 million)
2013: 25.7 percent (11.3 million)
2014: 17.2 percent (9.1 million)
2015: 13.3 percent (7.4 million)
2016: 11.9 percent (6.7 million)
Source: Attom Data Solutions