Share of U.S. Mortgage Holders in ‘Negative Equity’ Falls Below 10%

Propelled mostly rising home values, the share of American homeowners who owe more on their mortgages than their homes are worth dropped to 9.1 percent during the fourth quarter of 2017, Zillow reported Wednesday.

That’s the first time “negative equity” has fallen below 10 percent since the bottom of the housing crisis – late 2011 and early 2012. Back then, the share was 31 percent of homeowners with a mortgage.



Nonetheless, that 9.1 percent still represents 4.4 million U.S. mortgage holders who owe more than their homes are worth; of those, 16.3 percent (713,000 people) owe at least twice as much as their homes’ value.

Among major metros, Virginia Beach, Va., has the largest share – 16.7 percent – of mortgage holders “underwater” financially. That’s down from 34 percent at its worst, in mid-2012. Zillow says that Virginia Beach is a military town where many borrowers buy homes with zero percent down that are backed by the U.S. Department of Veterans Affairs.

Virginia Beach is followed by Chicago (15.5 percent negative equity), Baltimore (14.2 percent), Cleveland (13 percent) and St. Louis, Mo. (12 percent) for the share of homeowners with mortgages who are in negative equity.

San Jose, Calif., and San Francisco are the major markets with the smallest share – 1.9 percent and 3.1 percent, respectively – of homeowners underwater. That’s largely because home values in the Bay Area have climbed so precipitously.

Some markets – Detroit, for example, at 10.8 percent overall negative equity– have a large share of underwater homeowners who owe more than 200 percent of their home’s value. In Detroit, 25.4 percent of mortgage holders with negative equity owe more than 200 percent.