Find out whether lack of home equity is a problem where you live

More than 20 percent of mortgaged homeowners in the Twin Cities metro area are effectively underwater, meaning they don't have enough equity to cover the cost of selling their house and buying another one, according to a Star Tribune analysis of effective negative equity rate data from Zillow.com.

The situation has put a broad swath of homeowners and potential buyers on the sidelines. House listings in the Twin Cities are near all-time lows. At the end of March, there were 32 percent fewer houses on the market than two years earlier, primarily because of a 55 percent decline in houses priced less than $250,000.

A home that's "effectively underwater" may not actually owe more than the home is worth, but equity of less than 20 percent means they wouldn't clear enough money in a sale to cover commissions, fees and a down payment on another home. That makes it hard to put those homes on the market.

The listing shortage, which is due in part to the lack of equity, is concentrated in communities with an abundance of inexpensive houses. In some communities, one-third of the homeowners are effectively underwater.

Below the map, click on a name of a community or use the "Search by city" function to find the percentage of mortgaged homes with less than 20 percent equity, and the number of house listings in your city. Zillow did not have data for some communities; they are not included.

Curious about where the hottest housing markets in the Twin Cities are? Check out the map here.

Methodology

This analysis is based on 2016 year-end data from Zillow.com, which calculated home equity for 110 million single-family houses, condominiums and cooperatives by comparing its market value estimates with all outstanding mortgage debt, including lines of credit, from TransUnion.

Housing inventory data is from the Minneapolis Area Association of Realtors, as of the end of March 2017. The Star Tribune grouped the data into three price ranges: Less than $250,000 (starter homes), between $250,000 and just under $500,000 (trade-up homes) and homes over $500,000 (premium).

Price-per-square-foot data also came from the Minneapolis Area Association of Realtors. Community characteristics data came from the U.S. Census Bureau's 2011-2015 American Community Survey.

Ethan Nelson contributed to this report. He is a student at the University of Minnesota on assignment for the Star Tribune.