President Obama recently announced he would extend the nation’s mortgage refinancing program in an effort to provide relief to homeowners whose mortgages are worth more than the value of their homes. With 11 million underwater households no one can claim the housing crisis over. However, some regions have survived the crisis better than others. In those areas, home values are either stable or rising, and unemployment is below the national average.

24/7 Wall St. has identified the markets with the least underwater homes. When the housing bubble was in full swing in the beginning of the 2000s, millions of Americans bought new homes at historic high prices. Based on the belief that property values continue to rise, it seemed a good strategy. However, when the housing bubble finally burst and the recession began, home values declined sharply, unemployment skyrocketed, and homeowners could no longer make their mortgage payments.

Read: The American Cities Sunk By Underwater Mortgages
Read: the American Cities Where Mortgages are Staying Afloat

Strong employment and housing markets went hand in hand. Regions that added jobs also had sizzling housing markets. Of course, the housing boom in these areas contributed to further job growth. In places like Las Vegas, which saw major job growth during the the boom, home prices increased by 36% during the first half of the decade. When the market collapsed, these regions were hurt the most. The extension of the Home Affordable Modification Program, which is considered a failure by many economists, may provide a shot in the arm to such markets.

It appears the only places that managed to survive this crisis were those that were suffering economically at the time when people were building and buying new homes. These cities, which include Rochester, Buffalo, and Pittsburgh, were in many cases former industrial powerhouses that have been steadily losing jobs for the past 40 years. In these regions, home values remained stable during the crisis and relatively few risky mortgages were taken out on new homes.

Now, these regions, which did not benefit from the nation’s housing boom, are doing better than most. Because fewer homes were built in the last decade and these cities are now adding jobs, prices have remained stable and even increased.

Using data obtained from housing data and analytics firm CoreLogic, 24/7 Wall St. has identified the ten regions built around an urban center — core-based statistical areas — with housing markets that had the lowest percent of homes with underwater mortgages. We compared the data to the number of REO sales (sales of homes that had been repossessed) and distressed sales (sales by homeowners who could not continue to make mortgage payments) for the same regions. We obtained unemployment data from the Bureau of Labor Statistics. We obtained data on homes built since 2000 from the U.S. Census Bureau.

Here is 24/7 Wall St. ten cities with the fewest underwater mortgages.

10. Honolulu, HI
> Pct. homes underwater: 6.58%
> 12-Month home price change: +6.97%
> Unemployment: 5.5%
> Homes built since 2000: 11%

The value of homes in the Hawaii region has gone up nearly 7% in the past 12 months, which is one of the biggest price increases in the country, according to enterprise risk management firm VeroFORECAST. Honolulu owes its strong housing market to a low unemployment rate — just 5.5% — as well as a general high demand for homes. Properties on the island have a much higher value than the U.S. average. According to the Census Bureau’s housing statistics, 58.3% of Honolulu’s homes are worth $500,000 or more, compared to the national average of just 10.5%.

9. Pittsburgh, PA
> Pct. homes underwater: 5.93%
> 12-Month home price change: +4.39%
> Unemployment: 7.8%
> Homes built since 2000: 6.7%

About 94% of all homes in the Pittsburgh region are more valuable than their mortgages. Homeowners in the region are fiscally sound. The 7.8% unemployment rate is significantly lower than the national average of 9.1%. In addition, the costs associated with owning a home – mortgages, insurance payments, and taxes – are lower than the national average. According to the Pittsburgh Tribune-Review, many are choosing to buy homes in the region because housing is affordable and foreclosures are relatively low. Last year, Forbes named Pittsburgh as the best place to buy a Home. This year, the city was rated second.

8. Oklahoma City, OK
> Pct. homes underwater: 5.71%
> 12-Month home price change: +0.83%
> Unemployment: 5%
> Homes built since 2000: 15.8%

Oklahoma City was rated by Forbes as the fourth best city to buy a home, citing the region’s good conditions for employment. Among the 372 Metropolitan Statistical Areas in the U.S., Oklahoma City has the 11th lowest unemployment rate, at just 5%. According to NewsOK, despite the relatively good condition of the local housing market, regional officials are still thankful for the changes to the Affordable Refinance Program.

7. Lancaster, PA
> Pct. homes underwater: 5.44%
> 12-Month home price change: -1.83%
> Unemployment: 7.3% (tied for 93rd lowest)
> Homes built since 2000: 10.6%

Lancaster, located in Pennsylvania’s Dutch country, has one of the healthiest housing markets in the country, with just 5.44% of homes with underwater mortgages. The region has low unemployment, and 95.5% of homes are occupied, compared to a national rate of 86.9%. This year, Forbes rated Lancaster as the 7th best place to buy a home, citing low unemployment and affordable housing.

6. Huntsville, AL
> Pct. homes underwater: 5.30%
> 12-Month home price change: -4.39%
> Unemployment: 8.1%
> Homes built since 2000: 21.7%

Only 9.1% of home sales in Hunstville, Alabama are made by owners who can no longer afford to make mortgage payments. Part of the reason for this is the relatively small expenses owners have to incur to keep the home, such as mortgage and insurance payments. In 53% of the region’s homes, these costs for homeowners are less than 20% of their annual income. In the U.S. as a whole, only 33% of homes are in that favorable position.

5. Fayetteville, NC
> Pct. homes underwater: 4.56%
> 12-Month home price change: +1.14%
> Unemployment: 6.6%
> Homes built since 2000: 21.6%

The expenses that come with owning a home include mortgage and insurance payments, real estate taxes, and heating costs. Nationwide, nearly 30% of homeowners pay more than 2,000 or more on such expenses. In Fayetteville, North Carolina, just 10% pay that much. Unemployment in the region is relatively high, at 10.4%, but low costs and rising home values in the region help keep more than 95% of the region’s mortgages above water.

4. Buffalo-Niagara Falls, NY
> Pct. homes underwater: 4.22%
> 12-Month home price change: 3.92%
> Unemployment: 7.3%
> Homes built since 2000: 5.3%

Buffalo home values have been declining for years as businesses have slowly left the region. However, the housing market is beginning to pick up in the region. As reported in USA Today, the Buffalo housing market remained sluggish during the housing bubble, and so it didn’t suffer from the collapse most of the country experienced. In the article, Bonnie Clement, a local realtor, explains: “We’ve never had a market that has gone way over the top, and, therefore, we don’t have a market that’s now falling down.” In the past 12 month period, home values have increased by nearly 4%.

3. Albany-Schenectady-Troy, NY
> Pct. homes underwater: 4.01%
> 12-Month home price change: -0.90%
> Unemployment: 6.7%
> Homes built since 2000: 9.6%

Just 4.01% of mortgaged homes in the Albany region are worth less than their mortgages. Like Buffalo, the region didn’t experience much of a housing boom with the rest of the nation, and so the market hasn’t suffered as much in the aftermath. Only 9.6% of currently standing homes were built in the past ten years, compared to a national average of 14.9%. Unemployment in the region is just 6.7%, and just 2.58% of home sales were made because owners could no longer afford upkeep.

2. El Paso, TX
> Pct. homes underwater: 3.89%
> 12-Month home price change: +5.73%
> Unemployment: 10.6%
> Homes built since 2000: 19.6%

In the past 12 months, home prices in El Paso have increased by 5.73%, while prices nationwide have dropped by 4.4%. The housing market in the region, according to the El Paso Times, is exceedingly tight. Just 8.2% of homes are vacant, compared to a national rate of 13.1%. According to the article, El Paso is seeing “Historically low home mortgage rates, including a drop below 4 percent for the first time ever early this month…” This has helped increase home value in the area.

1. Rochester, NY
> Pct. homes underwater: 3.41%
> 12-Month home price change: +0.25%
> Unemployment: 7.1%
> Homes built since 2000: 7.2%

Just 3.41% of mortgages in the Rochester, NY region are underwater mortgages. This is the lowest rate in the country. The story for Rochester is very much the same as its regional neighbors Albany and Buffalo. The housing boom failed to reach the area, and so very few new homes were built. In the U.S., 8.8% of all homes were built between 2000 and 2005. In Rochester, just 4.1% of current homes were built during that period. Foreclosure rates have been extremely low in the region. In the past recorded 12-month period, just 2.89% of home sales were of formerly foreclosed-upon homes.

-Michael B. Sauter

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