Welcome!

News Feed Item

U.S. Negative Equity Rate Dips Below 20 Percent in Q4, Less Than 10 Million Remain Underwater

- U.S. negative equity rate falls to 19.4 percent of all homeowners with a mortgage in Q4 2013.

SEATTLE, Feb. 28, 2014 /PRNewswire/ -- The national negative equity rate ended 2013 below 20 percent for the first time in yearsi, dipping to 19.4 percent of all homeowners with a mortgage, according to the fourth quarter Zillow® Negative Equity Reportii. Nationally, more than 9.8 million homeowners remain underwater, owing more on their mortgage than their home is worth.

Negative equity has fallen for seven consecutive quarters as home values have risen, freeing almost 3.9 million homeowners nationwide in 2013. The national negative equity rate fell from 27.5 percent of all homeowners with a mortgage as of the end of the fourth quarter of 2012, and 21 percent in the third quarter.

But while negative equity is slowly but surely receding, a number of factors will help ensure it remains a factor in the market for years to come. The "effective" negative equity rate, which includes those homeowners with a mortgage with 20 percent or less equity in their homes, remains stubbornly high. More than one-third of homeowners with a mortgage (37.6 percent) are effectively underwater, unable to sell their homes for enough profit to comfortably meet expenses related to listing a home and purchasing a new one.

"We've reached an important milestone as negative equity has fallen below 20 percent nationwide, which has helped free up marginally more inventory and contribute to further stabilization of the market," said Zillow Chief Economist Dr. Stan Humphries. "But a number of headwinds will prevent negative equity from falling at the kind of sustained, rapid pace we need before the market can completely return to normal, and it remains roughly four times what it is in a healthier market. High negative equity is just another sign of how distorted the market continues to be, and how far we still have to go on the road back to normal."

Home values ended 2013 up 6.6 percent, the single-largest contributor to the falling negative equity rate. But the pace of home value appreciation is slowing, with home values expected to rise just 3.4 percent over the next 12 months, according to the most recent Zillow Home Value Forecastiii. As home value appreciation slows, the pace of negative equity improvement will slow.

Nationwide, the negative equity rate is expected to fall to 17.2 percent by the end of 2014, according to the Zillow Negative Equity Forecastiv. But in some local markets, negative equity could rise as homes lose value. Negative equity is expected to rise in 26 metro markets nationwide, including in St. Louis, the only market among the 35 largest that is expected to see its negative equity rate go up in the next year. Negative equity is expected to remain flat in another 227 metros.

Finally, at the end of the fourth quarter, the number of homes foreclosed nationwide fell to just over 5 homes per 10,000, from roughly 6.1 homes per 10,000 at the end of 2012. As foreclosure activity continues to fall, the pace of negative equity improvement will also slow, as homeowners' debt is wiped from lenders' books following foreclosure.

Metro

Q4 2013

Negative

Equity

Rate

Q4 2013

"Effective"

Negative

Equity Rate

Forecasted

Negative

Equity Rate

(Q4 2014)

 UNITED STATES

19.4%

37.6%

17.2%

New York

16.2%

30.3%

14.7%

Los Angeles

11.6%

24.1%

8.9%

Chicago

29.7%

46.2%

27.2%

Dallas-Fort Worth

12.9%

38.1%

11.2%

Philadelphia

20.9%

39.4%

19.8%

Houston

10.2%

29.7%

9.5%

Washington

20.5%

38.5%

18.4%

Miami-Fort Lauderdale

26.7%

39.5%

23.9%

Atlanta

35.0%

54.1%

29.3%

Boston

10.4%

26.4%

9.2%

San Francisco

10.7%

21.1%

8.6%

Detroit

27.9%

42.1%

24.6%

Riverside

24.5%

40.9%

17.0%

Phoenix

22.2%

38.8%

20.0%

Seattle

20.2%

38.9%

16.5%

Minneapolis-St Paul

18.6%

39.1%

16.6%

San Diego

13.1%

28.4%

10.3%

St. Louis

23.8%

45.1%

26.8%

Tampa

28.6%

44.7%

24.2%

Baltimore

22.3%

41.7%

19.7%

Denver

10.6%

32.3%

9.4%

Pittsburgh

11.3%

27.3%

10.3%

Portland

15.2%

35.4%

12.1%

Sacramento

20.5%

37.7%

14.9%

San Antonio

13.7%

36.1%

12.8%

Orlando

30.3%

46.7%

24.6%

Cincinnati

21.2%

44.0%

20.3%

Cleveland

23.6%

42.5%

23.0%

Kansas City

24.0%

47.7%

23.6%

Las Vegas

35.1%

52.0%

30.7%

San Jose

6.7%

15.5%

5.5%

Columbus

21.6%

45.4%

18.4%

Charlotte

21.6%

46.9%

19.4%

Indianapolis

18.4%

41.7%

17.5%

Austin

9.0%

29.5%

8.4%

These results are from the fourth quarter 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).

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. 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 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. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage MarketplaceZillow Rentals, Zillow Digs™, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and StreetEasy®. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy and Agentfolio are registered trademarks of Zillow, Inc. HotPads and Zillow Digs are trademarks of Zillow, Inc.

TransUnion is a registered trademark of Trans Union LLC.

i For the period beginning in Q2 2011, when Zillow adopted its current methodology for calculating negative equity, through Q4 2013.
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 650 metros, 1,900 counties, and 20,000 ZIP codes across the nation.
iii January 2013-January 2014. The Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and for more than 250 markets across the country.
iv The Zillow Negative Equity Forecast is a conservative estimate of what negative equity rates will be a year from now. To forecast negative equity, we take the current home value of a house and appreciate it by the Zillow Home Value Forecast (ZHVF) for the MSA in which the home is located. In cases where there is no ZHVF available, we use the historical rate of home appreciation, and for metros that don't have a historical rate of appreciation we use the historical rate of inflation at the national level. For homes that are not located in a metropolitan area, we use the forecasted national rate of appreciation. To calculate the level of home equity a year from now, we use the forecasted home value and the current outstanding debt balance, where we make no assumptions about a homeowner's debt level a year from now. We also make no assumptions about foreclosure activity in the coming year. Therefore, this forecast is a very conservative one, as homeowners will likely continue to pay down their debt throughout the year and homes will likely continue to be foreclosed on, and both of these factors will contribute to a lower negative equity rate. The Zillow Negative Equity Forecast can therefore be considered a higher bound estimate of negative equity.

SOURCE Zillow, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
"Venafi has a platform that allows you to manage, centralize and automate the complete life cycle of keys and certificates within the organization," explained Gina Osmond, Sr. Field Marketing Manager at Venafi, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Effectively SMBs and government programs must address compounded regulatory compliance requirements. The most recent are Controlled Unclassified Information and the EU's GDPR have Board Level implications. Managing sensitive data protection will likely result in acquisition criteria, demonstration requests and new requirements. Developers, as part of the pre-planning process and the associated supply chain, could benefit from updating their code libraries and design by incorporating changes. In...
"Coalfire is a cyber-risk, security and compliance assessment and advisory services firm. We do a lot of work with the cloud service provider community," explained Ryan McGowan, Vice President, Sales (West) at Coalfire Systems, Inc., in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Regulatory requirements exist to promote the controlled sharing of information, while protecting the privacy and/or security of the information. Regulations for each type of information have their own set of rules, policies, and guidelines. Cloud Service Providers (CSP) are faced with increasing demand for services at decreasing prices. Demonstrating and maintaining compliance with regulations is a nontrivial task and doing so against numerous sets of regulatory requirements can be daunting task...
CloudJumper, a Workspace as a Service (WaaS) platform innovator for agile business IT, has been recognized with the Customer Value Leadership Award for its nWorkSpace platform by Frost & Sullivan. The company was also featured in a new report(1) by the industry research firm titled, “Desktop-as-a-Service Buyer’s Guide, 2016,” which provides a comprehensive comparison of DaaS providers, including CloudJumper, Amazon, VMware, and Microsoft.
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, sha...
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, will discuss how AI can simplify cloud operations. He will cover the following topics: why clou...
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web ...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes how...
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Phil Hombledal, Solution Architect at CollabNet, discussed how customers are able to achieve a level of transparency that e...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...