Central Falls leads state in underwater mortgages

Central Falls has the highest percentage of mortgages in negative equity of all 39 cities and towns in Rhode Island, while Little Compton claims the lowest percentage, according to data compiled by Zillow.com. More

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Central Falls leads state in underwater mortgages

COURTESY ZILLOW.COM
ACCORDING TO A Zillow.com report, 23.7 percent of all Rhode Island mortgages are in negative equity, ranking the Ocean State 41st among the 50 U.S. states and the District of Columbia for highest negative equity rate. Massachusetts, with 12.4 percent of mortgages underwater, ranks 14th.
Posted 3/4/14

PROVIDENCE – Central Falls has the highest percentage of mortgages in negative equity of all 39 cities and towns in Rhode Island, while Little Compton claims the lowest percentage, according to data compiled by Zillow.com.

In Central Falls, 43.5 percent of all homes were valued at less than the outstanding balance of the mortgage during the fourth quarter of 2013. Woonsocket and Pawtucket also reported high negative equity rates, at 42.2 percent and 40.89 percent, respectively, while Little Compton came in at the bottom of the list, with 3.52 percent of mortgages underwater.

New Shoreham (5.73 percent) and Narragansett (6.47 percent) joined Little Compton as the municipalities with the lowest negative equity rates statewide.

Rhode Island’s two largest cities, Providence and Warwick, ranked fourth-highest and 10th-highest respectively, with 36.17 percent of Providence mortgages underwater and 28.12 percent of Warwick mortgages underwater.

Nineteen of Rhode Island’s municipalities reported negative equity rates higher than the national rate of 19.4 percent.

To calculate local negative equity rates, the Zillow Negative Equity Report released on Feb. 27 matched the estimated value of a home as of the fourth quarter of 2013 to all outstanding mortgage debt and lines of credit associated with the home, including home equity lines of credit and home equity loans.

Statewide, 23.7 percent of all Rhode Island mortgages are in negative equity, ranking the Ocean State 41st among the 50 U.S. states and the District of Columbia for highest negative equity rate.

The county with the highest percentage of underwater mortgages in Rhode Island is Providence County, with 28.9 percent. Kent County came in second with 26 percent, followed by Washington County (12.9 percent), Newport County (12.2 percent) and Bristol County (11.8 percent).

Across the border in Massachusetts, 12.4 percent of mortgages are underwater, ranking the state 14th lowest overall. Bristol County at 17.2 percent ranked second among the Bay State counties for highest percentage of negative equity mortgages, just below Worcester County with 18.3 percent.

“2013 was a good year for regaining some of the home value losses that homeowners had to endure during the housing bust, which meant it was also a good year for reducing negative equity,” the Zillow report stated, pointing to a marked drop in the national negative equity rate to 19.4 percent in the fourth quarter of 2013 compared with 27.5 percent during the same period a year earlier.

“Despite these incredible improvements in negative equity, the level is still very high and will remain high as deeply underwater homeowners are slowly being lifted toward positive equity,” the report warned. “This is a process that will take several years – especially in the hardest-hit markets – to work off the high levels of negative equity.”

The complete ranking of Rhode island’s cities and towns by negative equity rate, from highest to lowest, is as follows:

  • No. 1 – Central Falls: 43.50 percent

  • No. 2 – Woonsocket: 42.20 percent

  • No. 3 – Pawtucket: 40.89 percent

  • No. 4 – Providence: 36.17 percent

  • No. 5 – North Providence: 33.66 percent

  • No. 6 – West Warwick: 33.42 percent

  • No. 7 – Hopkinton: 31.48 percent

  • No. 8 – Johnston: 28.65 percent

  • No. 9 – East Providence: 28.16 percent

  • No. 10 – Warwick: 28.12 percent

  • No. 11 – Cranston: 26.33 percent

  • No. 12 – Coventry: 23.91 percent

  • No. 13 – Burrillville: 22.84 percent

  • No. 14 – Cumberland: 21.22 percent

  • No. 15 – Lincoln: 21.20 percent

  • No. 16 – Smithfield: 20.82 percent

  • No. 17 – Glocester: 20.73 percent

  • No. 18 – North Smithfield: 19.61 percent

  • No. 19 – Richmond: 19.50 percent

  • No. 20 – Foster: 19.01 percent

  • No. 21 – West Greenwich: 18.79 percent

  • No. 22 – Barrington: 18.43 percent

  • No. 23 – Scituate: 18.20 percent

  • No. 24 – Tiverton: 16.79 percent

  • No. 25 – Warren: 14.18 percent

  • No. 26 – East Greenwich: 13.12 percent

  • No. 27 – Charlestown: 12.821 percent

  • No. 28 – Newport: 12.819 percent

  • No. 29 – Westerly: 12.79 percent

  • No. 30 – Bristol: 12.70 percent

  • No. 31 – South Kingstown: 12.43 percent

  • No. 32 – Middletown: 12.12 percent

  • No. 33 – North Kingstown: 12.03 percent

  • No. 34 – Exeter: 11.86 percent

  • No. 35 – Portsmouth: 11.35 percent

  • No. 36 – Jamestown: 6.67 percent

  • No. 37 – Narragansett: 6.47 percent

  • No. 38 – New Shoreham: 5.73 percent

  • No. 39 – Little Compton: 3.52 percent

In addition, the Zillow.com report broke out negative equity data for five villages and census-designated places around Rhode Island:

  • Bradford (Hopkinton/Westerly): 22.78 percent

  • Ashaway (Hopkinton): 22.29 percent

  • Greenville (Smithfield): 21.27 percent

  • Hope Valley (Hopkinton): 18.44 percent

  • Kingston (South Kingstown): 13.73 percent

The Zillow Negative Equity Report highlighted the role of negative equity in the real estate market over the past year. Negative equity limits available for-sale inventory in the marketplace, which in turn causes “extreme rates” of home value appreciation.

“2014 will see a lot more moderation,” the report stated. “Home value appreciation will continue to decline, negative equity rates will also decline, albeit at lower speeds, and inventory will continue to rise, giving many buyers another chance in the market if they were sidelined last year.”

On average, Zillow said, a U.S. homeowner in negative equity owes $73,405, or 39.7 percent, more than the home is worth.

To view the complete report, visit www.zillow.com/research.

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