Buyers looking for affordable homes aren't finding much in today's housing market. While investors snatched up most foreclosures, another after effect of the crash is keeping supply short: negative equity. Nearly 10 million borrowers still owe more on mortgages than their homes are currently worth, according to Zillow. That has kept them stuck in place.
As home prices rise, the nation's negative equity or "underwater" rate is falling overall, but affordable homes are still drowning disproportionately. They are three times more likely to be underwater than expensive homes, according to Zillow. Thirty percent of mortgaged homes in the bottom price tier ($98,400 and below) are in negative equity, compared with 18 percent in middle tier ($98,400 to $306,700) and 10.7 percent in top tier ($306,700-plus).