US Real Estate Report: Negative Equity Data

US Real Estate Report: Negative Equity Data

Homeowners who owe more than their homes are worth are nearly equally dispersed among urban and suburban communities in most metros across the country.

– Nationally, 12.1 percent of mortgaged homeowners are underwater, down from 12.7 percent in Q1 and 14.4 percent a year ago.

– Cleveland and Detroit have the greatest difference between urban and suburban negative equity rates.

– Negative equity is lowest in Western metros with strong job and housing markets.

Both urban and suburban communitiesi have a significant share of homeowners in negative equity five years into the recovery, according to the second quarter Zillow® Negative Equity Reportii.

Nationally, 13.7 percent of homeowners in urban regions and 11.2 percent of homeowners in suburban regions are underwater.

After the housing bubble burst, nearly a third of homeowners in the United States were underwater on their mortgages. As the market recovered, many homeowners have gained back the lost value on their homes, freeing them to sell or refinance.

In most areas of the country, negative equity is nearly equally spread across urban and suburban areas. In 13 of the nation’s largest metros, the share of urban and suburban homeowners who are underwater is within two percentage points.

But some metros are seeing notable gaps in the share of underwater homeowners between urban and suburban areas. Cleveland and Detroit have the biggest difference between negative equity rates in urban and suburban neighborhoods – 13.6 and 10.8 percentage points, respectively. In these metros, home values in the main urban centers are trailing behind the overall region’s recovery, and are still well off from their peak levels.

By contrast, negative equity is equally common among urban and suburban areas in the Seattle area, where a more balanced recovery and strong economic growth have led to home values near or exceeding their bubble peak levels in urban and suburban areas alike.

“At its worst, negative equity touched all kinds of homeowners in all kinds of markets,” said Zillow Chief Economist Dr. Svenja Gudell. “The type of community a given home was in – urban or suburban – mattered little. Fast-forward a few years, and the relative vibrancy of a given community and how it has performed over the past few years, and not necessarily its location in the city or suburbs, matters a great deal.”

Overall, the national negative equity level fell to 12.1 percent, down from 12.7 percent in the first quarter and 14.4 percent a year ago. For the first time, all of the largest markets in the country now have negative equity rates below 20 percent.

Western metros with strong job and housing markets have the lowest rates of negative equity. Less than 5 percent of mortgaged homeowners in San Jose, San Francisco, Portland, Denver, and Dallas are underwater.

Metropolitan Area

2015 Q2
Negative
Equity Rate

2016 Q2
Negative
Equity Rate

2016 Q2 Urban
Negative
Equity Rate

2016 Q2 Suburban
Negative Equity
Rate

United States

14.4%

12.1%

13.7%

11.2%

New York/Northern New Jersey

12.0%

11.0%

13.3%

10.4%

Los Angeles-Long Beach-Anaheim, CA

7.8%

6.1%

6.8%

5.5%

Chicago, IL

22.0%

19.0%

25.7%

17.3%

Dallas-Fort Worth, TX

6.2%

4.8%

5.2%

4.5%

Philadelphia, PA

16.9%

14.2%

20.6%

12.4%

Houston, TX

6.4%

6.9%

N/A

N/A

Washington, DC

16.4%

14.2%

15.7%

13.6%

Miami-Fort Lauderdale, FL

16.3%

11.8%

14.1%

11.2%

Atlanta, GA

20.9%

14.7%

19.3%

13.9%

Boston, MA

7.9%

6.6%

9.5%

6.0%

San Francisco, CA

5.4%

4.0%

4.1%

3.7%

Detroit, MI

18.3%

14.0%

22.6%

11.8%

Riverside, CA

15.8%

12.0%

13.6%

11.3%

Phoenix, AZ

18.2%

12.6%

12.6%

12.4%

Seattle, WA

11.9%

7.4%

7.2%

7.3%

Minneapolis-St Paul, MN

13.2%

8.9%

10.1%

8.5%

San Diego, CA

8.6%

7.1%

8.2%

6.4%

St. Louis, MO

18.8%

14.7%

N/A

N/A

Tampa, FL

17.6%

12.1%

13.1%

11.9%

Baltimore, MD

17.8%

16.7%

22.5%

14.6%

Denver, CO

6.0%

4.8%

5.9%

4.3%

Pittsburgh, PA

10.2%

9.2%

10.8%

8.3%

Portland, OR

7.5%

4.2%

4.3%

4.1%

Charlotte, NC

12.1%

9.2%

10.3%

9.2%

Sacramento, CA

13.0%

8.8%

N/A

N/A

San Antonio, TX

11.0%

11.0%

N/A

N/A

Orlando, FL

17.8%

13.4%

N/A

N/A

Cincinnati, OH

15.4%

12.5%

16.7%

11.8%

Cleveland, OH

18.3%

15.5%

27.2%

13.6%

Kansas City, MO

17.9%

15.0%

N/A

N/A

Las Vegas, NV

25.0%

19.5%

23.2%

17.2%

Columbus, OH

14.2%

10.2%

17.7%

9.4%

Indianapolis, IN

15.0%

15.2%

21.4%

14.4%

San Jose, CA

3.4%

2.4%

2.7%

2.3%

Austin, TX

6.9%

6.7%

7.1%

6.3%

 

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 Zillow based its definition of urban and suburban regions on a 2014 survey of how people define their own neighborhoods – as either urban, rural, or suburban – and then used characteristics of those places to extrapolate the results and define ZIP codes all over the country.

ii 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.