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Negative Equity Continues to Weigh Down Housing Markets, Limiting New Inventory

Even as home values continue to rise, more than a half million homeowners still owe more than twice what their homes are worth.

- Six million homeowners were underwater in the fourth quarter of 2015, down from a peak of nearly 16 million in the first quarter of 2012.

- The negative equity rate dropped 0.3 percentage points from Q3 to 13.1 percent, the slowest pace in a year.

- More than 20 percent of homeowners in Las Vegas and Chicago were still underwater.

Mar 9, 2016

SEATTLE, March 9, 2016 /PRNewswire/ -- Fewer homeowners were underwater as the negative equity rate fell to 13.1 percent in the United States, according to the fourth quarter Zillow® Negative Equity Reporti. But more than 820,000 underwater homeowners still owe over twice as much on their mortgages as their homes are worth, a reminder that some owners may not see positive equity in their homes in the foreseeable future.

Six million homeowners were still in negative equity, which means they owe the bank more than their homes are worth. A year ago, 8 million homeowners were upside down on their mortgages.

Over time, negative equity can act as an anchor on a housing market, preventing underwater homeowners from listing their homes and reentering the market.  It is more prevalent in less expensive areas that are affordable to first-time buyers. Without these homes available, many potential buyers are sidelined and unable to take advantage of mortgage rates that remain near historic lows.

In the past year, millions of underwater homeowners resurfaced as the total amount of negative equity declined by $75 billion, but some owners are so far underwater that positive equity may be several years away, leaving them stuck in their homes unable to sell.

"Even though the number of underwater homeowners has fallen significantly since the peak of the housing crisis, negative equity persists in many markets as it fell at its slowest pace in a year," said Zillow Chief Economist Dr. Svenja Gudell. "Things are moving in the right direction, but some owners are still deeply underwater. As we move into the home shopping season, inventory is already low, and negative equity is keeping potential additional stock from becoming available."

Las Vegas, ground zero of the housing crash, still had the highest rate of negative equity at 20.9 percent, followed closely by Chicago, where 20.5 percent of homeowners were upside down on their mortgages. In San Jose, only 2.8 percent of mortgaged homeowners were underwater.

Metropolitan Area

2015 Q4 Negative Equity Rate

2015 Q3 Negative Equity Rate

2014 Q4 Negative Equity Rate

2015 Q4
Share of
Underwater
Homeowners
Who Owe
More than
200%

United States

13.1%

13.4%

16.9%

13.0%

New York/Northern New Jersey

11.4%

11.5%

13.1%

10.6%

Los Angeles-Long Beach-Anaheim, CA

6.9%

7.1%

8.6%

8.8%

Chicago, IL

20.5%

20.6%

25.1%

16.6%

Dallas-Fort Worth, TX

5.8%

5.8%

8.6%

13.3%

Philadelphia, PA

15.0%

15.5%

19.1%

11.7%

Houston, TX

6.6%

6.2%

7.5%

14.8%

Washington, DC

15.3%

15.7%

18.2%

12.2%

Miami-Fort Lauderdale, FL

13.7%

14.7%

19.0%

14.0%

Atlanta, GA

17.6%

18.6%

26.1%

14.7%

Boston, MA

7.1%

7.1%

9.8%

11.6%

San Francisco, CA

4.4%

4.7%

6.6%

7.1%

Detroit, MI

16.1%

16.6%

21.3%

17.3%

Riverside, CA

13.5%

14.3%

17.0%

10.2%

Phoenix, AZ

15.2%

16.4%

20.6%

13.6%

Seattle, WA

9.5%

10.2%

15.6%

12.4%

Minneapolis-St Paul, MN

10.5%

11.7%

15.5%

10.4%

San Diego, CA

7.9%

8.1%

8.9%

8.6%

St. Louis, MO

17.0%

17.6%

22.8%

12.6%

Tampa, FL

14.7%

15.7%

21.2%

11.6%

Baltimore, MD

17.4%

16.9%

20.3%

12.9%

Denver, CO

5.5%

5.5%

7.7%

11.6%

Pittsburgh, PA

9.6%

9.8%

12.1%

12.7%

Portland, OR

5.6%

6.2%

10.9%

10.0%

Charlotte, NC

10.7%

11.0%

16.3%

16.9%

Sacramento, CA

10.4%

11.6%

14.8%

10.5%

San Antonio, TX

11.0%

10.7%

12.3%

17.4%

Orlando, FL

15.4%

16.1%

20.9%

11.2%

Cincinnati, OH

13.7%

14.5%

19.2%

13.4%

Cleveland, OH

17.1%

16.8%

21.4%

15.0%

Kansas City, MO

16.4%

16.6%

20.9%

12.5%

Las Vegas, NV

20.9%

22.1%

26.4%

13.4%

Columbus, OH

11.7%

12.9%

17.6%

17.2%

Indianapolis, IN

14.6%

15.5%

18.3%

14.0%

San Jose, CA

2.8%

3.0%

4.0%

5.6%

Austin, TX

7.1%

6.8%

7.9%

10.1%

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. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. 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.

Media contact:
Lauren Braun, Zillow
press@zillow.com

 

SOURCE Zillow


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