The City Council’s nascent discussion about how to help homeowners whose mortgages are underwater hit a bump last week. Some of the most shocking statistics in a report about the topic, presented to the Council last Wednesday, were wrong — based on old data and zip codes that fell outside the city limits. The number of homeowners who owe more on their mortgage than their house is worth is not 14.1 percent higher than the national average, as the report estimated, but rather 6.4 percent lower, according to June 2013 estimates from Zillow, a company that tracks real estate data.
The improved citywide numbers, while welcome news for many homeowners, obscure a more complex story about the local real estate recovery. Zillow estimates that 16,995 or about 17.4 percent of Seattle homes were underwater as of June, which is not bad considering the national average at that time was 23.8 percent. In three Seattle zip codes, however, according to the same estimates, over 30 percent of homeowners were struggling to pay-off underwater home loans. The uneven improvement in the local real estate market breaks not only along geographic boundaries but also along economic, ethnic and racial lines.
“If you look what’s happening in terms of the economic recovery, those well off, working in tech jobs are in a better financial position,” says Christopher Bitter, a professor at the Runstad Center for Real Estate Studies at the University of Washington. “The working class economy hasn’t been as kind.”
In Seattle, Bitter says, “If you look at real estate data, the east side prices are recovering much faster than the south side.” An interactive map on Zillow.com points to a similar trend. The map, which also uses June 2013 estimates, indicates that within Seattle, the zip code with the highest percentage of underwater mortgages is 98104. In this area — which includes parts of First Hill, Yesler Terrace, Downtown, Chinatown and the International District — 38 percent of mortgages are underwater. All three zip codes where the percentage of underwater mortgages exceeded 30 percent in Zillow's June estimates are south of Denny Way.
Across a wide range of categories, like income, education and race, the demographic contours between zip codes with the highest and lowest percentages of underwater mortgages are distinct, according to the 2010 Census and the 2007 to 2011 American Community Survey — the most recent data that the Census Bureau has published.
This data reveals that 28 percent of the roughly 13,095 people living within the 98104 zip code, where underwater mortgage rates are high, used food stamps in the 12-month period before they were surveyed. Thirty-two percent have a bachelor’s degree or advanced degree. Forty-eight percent are white, 24 percent Asian, 19 percent black and seven percent are Hispanic. Thirty-two percent of residents in the zip code are foreign born. Only 11 percent own homes.
By comparison, the 98105 zip code, which includes the University District and Laurelhurst, has one of the lowest underwater mortgage rates in the city, at about nine percent. Here, only 5 percent of the approximately 43,924 residents used food stamps in the 12-months before they were surveyed. Seventy-five percent have a bachelor’s or advanced degree. Seventy-one percent are white, 19 percent Asian, five percent Hispanic and two percent are black. Fifteen percent are foreign born and 35 percent own homes.
The 98106 zip code, which has the third highest rate of underwater mortgages, at 31 percent, resembles the 98104 zip code demographically. In the 98121 zip code, however, which includes Belltown and has the second highest underwater mortgage rate, at 34 percent, the similarities are echoed but less pronounced. For instance, the number of people who collected food stamps is relatively high at 10 percent, but so is the number of residents with college degrees, at 61 percent. The zip codes with the second and third lowest rates of underwater mortgages exhibit similar characteristics to the 98105 zip code, with low minority populations, high percentages of residents with college degrees and no more than 5 percent of residents having collected food stamps.
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