Negative Equity Recedes, But Most Underwater Owners Nowhere Near Resurfacing
The negative equity rate is declining at a slower rate, signaling that it will remain a drag on the housing market
- Nationally, 10.5 percent of homeowners with a mortgage were underwater at the end of 2016, down from 13.1 percent of homeowners a year earlier.
- In 2016, 1.2 million homeowners in negative equity were able to resurface, gaining positive value in their homes. Five million homeowners remain underwater.
- 44.5 percent of underwater homeowners are within 20 percent of reaching positive equity.
SEATTLE, March 7, 2017 /PRNewswire/ -- There are fewer homeowners underwater on their mortgages, but more than half of those who remain underwater owe at least 20 percent more than their homes are worth, according to Zillow's 2016 Q4 Negative Equity Reporti. The depth of negative equity alone will ensure that negative equity will continue to be a drag on the housing market even after home values return to pre-crisis levels.
Nationally, the share of homeowners with a mortgage who owe more than the value of their homes fell to 10.5 percent at the end of 2016. A year before, 13.1 percent of homeowners were underwater on their mortgages.
Home value appreciation has accelerated over the past few months, lifting thousands of underwater homeowners back into positive equity, but millions remain stuck in negative equity, unable to list their homes and re-enter the market. This acts as an anchor for the housing market, further limiting already constrained inventory.
"Negative equity is one of the most persistent reminders of the long-term losses suffered when the housing market collapsed," said Zillow Chief Economist Dr. Svenja Gudell. "Accelerating home value appreciation over the past few months was a blessing to owners who have been underwater since the housing bubble burst, but not all underwater owners were able to ride that wave to positive equity. We are in for many more years of elevated levels of negative equity. Even as median home values close in on peak levels reached during the housing boom, some people still face a long wait before returning to a positive balance on their home loans."
The rate of negative equity has declined each quarter since peaking at 31.4 percent in the first quarter of 2012. The decline of negative equity has slowed because most homes that were only slightly underwater have resurfaced as home values rebounded following the crash.
Las Vegas and Chicago had the highest rates of negative equity among the largest U.S. metros, with 16.6 and 16.5 percent of homeowners underwater, respectively. The West Coast is home to all five major metros with the lowest rates of negative equity.
| Metropolitan Area |
Percent of |
Percent of |
Percent of |
Percent of |
| United States |
10.5% |
13.1% |
44.5% |
46.8% |
| New York, NY |
9.4% |
11.4% |
44.0% |
45.9% |
| Los Angeles-Long Beach-Anaheim, CA |
5.5% |
6.9% |
42.9% |
45.2% |
| Chicago, IL |
16.5% |
20.5% |
39.8% |
40.5% |
| Philadelphia, PA |
11.6% |
15.0% |
48.1% |
51.1% |
| Washington, DC |
12.1% |
15.3% |
44.0% |
45.0% |
| Miami-Fort Lauderdale, FL |
10.1% |
13.7% |
39.8% |
39.1% |
| Atlanta, GA |
12.6% |
17.6% |
41.9% |
44.0% |
| Boston, MA |
6.2% |
7.1% |
40.7% |
44.5% |
| San Francisco, CA |
3.6% |
4.4% |
44.3% |
46.2% |
| Detroit, MI |
11.7% |
16.1% |
36.8% |
37.3% |
| Riverside, CA |
10.2% |
13.5% |
43.5% |
44.4% |
| Phoenix, AZ |
10.7% |
15.2% |
40.0% |
43.1% |
| Seattle, WA |
6.6% |
9.5% |
37.6% |
45.9% |
| Minneapolis-St Paul, MN |
7.3% |
10.5% |
45.8% |
54.7% |
| San Diego, CA |
6.1% |
7.9% |
44.6% |
48.3% |
| St. Louis, MO |
12.2% |
17.0% |
47.7% |
48.8% |
| Tampa, FL |
9.4% |
14.7% |
43.6% |
44.0% |
| Baltimore, MD |
14.0% |
17.4% |
46.2% |
48.7% |
| Denver, CO |
4.5% |
5.5% |
38.3% |
39.5% |
| Pittsburgh, PA |
8.3% |
9.6% |
44.9% |
48.0% |
| Portland, OR |
4.0% |
5.6% |
40.0% |
46.9% |
| Charlotte, NC |
8.1% |
10.7% |
37.9% |
47.3% |
| Sacramento, CA |
7.4% |
10.4% |
43.4% |
45.9% |
| Orlando, FL |
10.3% |
15.4% |
44.2% |
43.7% |
| Cincinnati, OH |
10.3% |
13.7% |
44.3% |
48.4% |
| Cleveland, OH |
13.7% |
17.1% |
41.5% |
44.2% |
| Kansas City, MO |
12.5% |
16.4% |
47.1% |
48.7% |
| Las Vegas, NV |
16.6% |
20.9% |
40.5% |
40.0% |
| Columbus, OH |
8.8% |
11.7% |
39.8% |
45.3% |
| Indianapolis, IN |
12.7% |
14.6% |
47.8% |
47.9% |
| San Jose, CA |
2.7% |
2.8% |
45.1% |
47.2% |
| Virginia Beach, VA |
16.4% |
22.2% |
49.2% |
16.4% |
| Nashville, TN |
6.1% |
7.9% |
37.2% |
17.7% |
| Providence, RI |
9.5% |
13.1% |
46.3% |
21.2% |
| Milwaukee, WI |
13.5% |
18.2% |
41.6% |
20.7% |
Zillow
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
i The data in the Zillow Negative Equity Report incorporates mortgage data from TransUnion, a global leader in credit and information management, to calculate various statistics. The report includes, but is not limited to, negative equity, loan-to-value ratios, and delinquency rates. To calculate negative equity, the estimated value of a home is matched to all outstanding mortgage debt and lines of credit associated with the home, including home equity lines of credit and home equity loans. All personally identifying information ("PII") is removed from the data by TransUnion before delivery to Zillow. Overall, this report covers more than 870 metros, 2,400 counties, and 23,000 ZIP codes across the nation.
SOURCE Zillow, Inc.
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