Negative Equity Recedes in Third Quarter; Fewer than 30% of Homeowners with
Mortgages Now Underwater
Negative Equity Declines in 30 Largest Metros, But Fiscal Cliff Could Derail
SEATTLE, Nov. 15, 2012
SEATTLE, Nov. 15, 2012 /PRNewswire/ --Negative equity fell in the third
quarter, with 28.2 percent of all homeowners with mortgages underwater, down
from 30.9 percent in the second quarter, according to the third quarter
Zillow® Negative Equity Report[i]. This is the first time negative equity has
fallen below 30 percent, and is the biggest quarter-over-quarter drop in
negative equity, since Zillow revised its method for determining negative
equity in the first quarter of 2011.
Slightly more than 14 million U.S. homeowners with a mortgage were in negative
equity, or underwater, in the quarter, owing more on their mortgages than
their homes are worth. That was down from 15.3 million in the second quarter.
Additionally, the nation's 30 largest metro areas covered by Zillow's report
experienced quarter-over-quarter declines in negative equity.
Much of the decline in negative equity can be attributed to U.S. home values
rising 1.3 percent in the third quarter compared to the second quarter, to a
median value of $153,800, according to the Zillow Home Value Index (ZHVI)[ii].
"The fall in negative equity rates means homeowners have additional options
for refinancing or selling their homes," said Zillow Chief Economist Dr. Stan
Humphries. "But while we're moving in the right direction, a substantial
number of homes are still locked up in negative equity, unable to enter the
existing re-sale market despite the desires of their owner. The housing market
has found real momentum of its own, but is not immune from shocks to the
broader economy. If negotiations centered on resolving the fiscal cliff don't
inspire confidence in investors and consumers alike, recent home value gains –
and, as a result, falling negative equity rates – could stall."
Of the 30 largest metro areas covered by the report, the five experiencing the
largest quarterly declines in negative equity were Phoenix (-6.2 percentage
points), Las Vegas (-5.5 percentage points), Denver (-4.9 percentage points),
Sacramento, Calif. (-4.6 percentage points) and Orlando (-4.2 percentage
These results are from the third edition of the Zillow Negative Equity Report,
which looks at current outstanding loan amounts for individual owner-occupied
homes and compares them to those homes' current estimated values. Loan data is
provided by TransUnion®, a global leader in credit and information management.
This is the only report that uses current outstanding loan balances on all
mortgages when calculating negative equity. Other reports estimate current
outstanding loan balance based on the most recent loan on a property (i.e.,
the original loan amount at time of purchase or refinance).
Q2 2012: Q3 2012:
% of Homeowners w/ % of Homeowners w/
Mortgages in Negative Mortgages in Negative
United States 30.9% 28.2%
New York 20.7% 19.4%
Los Angeles 28.6% 25.9%
Chicago 39.2% 36.6%
Dallas-Ft. Worth, Texas 28.9% 25.7%
Philadelphia 25.4% 23.8%
Washington DC 31.3% 28.5%
Miami-Fort Lauderdale, Fla. 43.7% 41.4%
Atlanta 54.4% 50.4%
Boston 19.6% 17.5%
San Francisco 28.5% 25.1%
Detroit 48.3% 45.2%
Riverside, Calif. 51.2% 47.3%
Phoenix 51.6% 45.5%
Seattle 37.8% 34.2%
Minneapolis-St. Paul, Minn. 38.7% 35.5%
San Diego 33.9% 30.6%
Tampa, Fla. 46.6% 43.2%
St. Louis 30.2% 28.0%
Baltimore 30.8% 28.1%
Denver 27.1% 22.2%
Pittsburgh 15.6% 14.3%
Portland, Ore. 33.2% 29.3%
Sacramento, Calif. 49.3% 44.7%
Orlando, Fla. 51.9% 47.7%
Cincinnati 30.3% 27.6%
Cleveland 32.9% 29.8%
Las Vegas 68.5% 63.0%
San Jose 20.3% 17.6%
Columbus 33.4% 29.6%
Charlotte 36.4% 33.6%
About Zillow, Inc.
Zillow (NASDAQ: Z) is the leading real estate information marketplace,
providing vital information about homes, real estate listings and mortgages
through its website and mobile applications, enabling homeowners, buyers,
sellers and renters to connect with real estate and mortgage professionals
best suited to meet their needs. In addition, Zillow operates an
industry-leading economics and analytics bureau led by Zillow's Chief
Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and
data analysts produce extensive housing data and research covering more than
350 markets at Zillow Real Estate Research. Zillow, Inc. operates Zillow.com®,
Zillow Mortgage Marketplace, Zillow Rentals, Zillow Mobile, Postlets®,
Diverse Solutions™ and Buyfolio™. The company is headquartered in Seattle.
Zillow.com, Zillow, Postlets and Diverse Solutions are registered trademarks
of Zillow, Inc. Buyfolio is a trademark of Zillow, Inc.
TransUnion is a registered trademark of Trans Union LLC.
[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 over 800 metros, 2,100 counties, and
22,200 ZIP codes across the nation.
[ii] The Zillow Home Value Index is the median Zestimate® valuation for a
given geographic area on a given day and includes the value of all
single-family residences, condominiums and cooperatives, regardless of whether
they sold within a given period. The Home Value Index at the national level
includes data from over 80 million homes in almost 3,000 counties and over 850
core-based statistical areas. It is expressed in dollars and is for a
particular geographic region.
Contact: Cory Hopkins, Zillow, +1-206-757-2701 or email@example.com
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