Negative Equity: 2M Homeowners Out from 'Underwater', But 27% Remain

Negative Equity: 2M Homeowners Out from 'Underwater', But 27% RemainNearly 2 Million American homeowners fell out of negative equity as their home values rose in the fourth quarter of 2012, but 27.5 percent of mortgage holders remain ‘underwater’, according to the latest figures from Zillow.
Phoenix, Los Angeles and Miami claimed the most homeowners “freed” from negative equity by the end of last year.
While more than a quarter of Americans still owe more on their mortgage than the value of their home, the percentage dropped from 31.1 percent in the fourth quarter of 2011.
American homeowners with a mortgage were collectively underwater by more than $1 trillion at the end of 2012.
In 2012, national home values rose 5.9 percent year-over-year, according to the Zillow Home Value Index, to a median value of $157,400.
This surge in home values, combined with sustained high foreclosure rates, were the main drivers for receding negative equity, Zillow said.
Zillow projects that all homeowners with a mortgage will fall to at least 25.5 percent by the fourth quarter of 2013, freeing nearly 1 million additional homeowners nationwide.
“As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets,” said Zillow Chief Economist Dr. Stan Humphries.
But negative equity rates are still too high, he said.
Millions of homeowners have “a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas,” Humphries said.

 

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