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/C O R R E C T I O N -- Zillow, Inc./

The press release "High Negative Equity Among Gen X Homeowners Causing Housing Market Gridlock" issued earlier this morning by Zillow contained an error. The wrong phrasing was used when describing Generation X's negative equity situation, resulting in a press release that does not accurately tell the story. Zillow said: 42.6% of Generation X homeowners with a mortgage are underwater. Zillow should have said: 42.6% of underwater homeowners are in Generation X. In fact, only 18.7% of Generation X homeowners with a mortgage are underwater. Additionally, Zillow has updated the chart in the press release that shows this data at the metro level. Zillow sincerely regrets the error. The complete, corrected release follows:

U.S. Negative Equity Falls to 17 Percent

More than one-third of mortgaged homeowners have "effective negative equity," or less than 20 percent equity in their home, according to a Zillow analysis

SEATTLE, Aug. 26, 2014 /PRNewswire/ -- One in six (17 percent) U.S. homeowners with mortgages – or 8.7 million – were still underwater on their mortgage in the second quarter of 2014, despite rising home values, according to the Zillow® Negative Equity Report[i] . This is down from 18.8 percent in the first quarter of 2014, and down from 23.8 percent from last year (Q2 2013).

The effective negative equity rate, or the percentage of homeowners who have less than 20 percent equity in their home, fell to 34.8 percent in the second quarter, down from 36.9 percent from the first quarter of 2014, and down from 41.9 percent last year (Q2 2013). Homeowners with less than 20 percent equity in their current home may have a difficult time covering the costs on selling and purchasing a new property.

Looking ahead, the national negative equity rate is expected to fall to 14.9 percent of all homeowners with a mortgage by the end of the second quarter of 2015, according to the Zillow Negative Equity Forecast[ii].

Of the 35 largest metros covered by Zillow, more than one-fourth of homeowners in Atlanta (28.9 percent), Las Vegas (27.4 percent) and Chicago (27.1 percent) were still underwater on their homes at the end of the second quarter. The lowest rates of negative equity were in San Jose, Calif. (4.6 percent), San Francisco (8.2 percent) and Austin, Tex. (8.3 percent).

Nationally, millennial homeowners held 19.6 percent of all underwater mortgages while Generation X held 18.7 percent and Baby Boomers held 10.9 percent.

Metropolitan Area

Q2 2014 Negative Equity Rate

Q2 2014 "Effective" Negative Equity Rate

Negative Equity Rate Among All Mortgaged Homeowners Aged 20-34

Negative Equity Rate Among All Mortgaged Homeowners Aged 35-49

Negative Equity Rate Among All Mortgaged Homeowners Aged 50-64

UNITED STATES

17.0%

34.8%

19.6%

18.7%

10.9%

New York/

Northern New Jersey

14.7%

28.5%

18.0%

19.0%

10.0%

Los Angeles

9.3%

19.9%

8.3%

11.7%

7.2%

Chicago

27.1%

43.6%

31.5%

30.5%

16.7%

Dallas-Fort Worth

10.4%

33.8%

13.1%

9.8%

6.0%

Philadelphia

20.1%

39.0%

29.2%

23.4%

11.8%

Houston

8.4%

26.0%

9.8%

7.7%

4.7%

Washington

19.3%

37.7%

18.6%

23.3%

15.3%

Miami-Fort Lauderdale

21.9%

33.8%

16.2%

23.0%

15.7%

Atlanta

28.9%

48.6%

23.6%

29.5%

21.2%

Boston

10.6%

26.1%

13.2%

13.3%

6.4%

San Francisco

8.2%

17.0%

7.3%

10.4%

6.7%

Detroit

23.2%

36.9%

14.6%

23.1%

15.4%

Riverside

18.0%

32.1%

11.5%

19.6%

15.3%

Phoenix

20.1%

36.4%

16.3%

23.5%

16.0%

Seattle

17.0%

34.9%

21.5%

20.1%

11.2%

Minneapolis-St Paul

17.9%

38.8%

20.2%

22.1%

11.1%

San Diego

10.0%

23.1%

9.5%

12.0%

7.7%

St. Louis

21.7%

42.9%

26.8%

23.8%

13.6%

Tampa

23.7%

39.4%

22.0%

26.3%

16.9%

Baltimore

21.7%

41.7%

29.1%

26.2%

14.2%

Denver

9.7%

30.9%

9.2%

10.7%

6.9%

Pittsburgh

10.6%

24.5%

12.5%

11.5%

6.0%

Portland

12.2%

31.6%

16.1%

14.4%

8.2%

Sacramento

16.9%

32.8%

11.9%

20.0%

14.0%

San Antonio

12.2%

34.3%

17.9%

12.2%

6.5%

Orlando

24.9%

41.0%

18.6%

26.7%

19.4%

Cincinnati

18.3%

40.9%

20.9%

20.3%

13.0%

Cleveland

20.8%

39.5%

22.7%

24.8%

14.0%

Kansas City

19.5%

42.9%

23.6%

20.2%

11.9%

Las Vegas

27.4%

43.6%

15.3%

28.7%

24.1%

San Jose

4.6%

11.6%

5.1%

5.9%

3.2%

Columbus

18.1%

40.7%

21.0%

19.8%

12.7%

Charlotte

17.3%

42.8%

20.3%

19.7%

11.5%

Indianapolis

15.2%

38.3%

17.3%

16.2%

10.5%

Austin

8.3%

27.8%

12.3%

8.1%

4.6%

About Zillow, Inc.

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 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. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage Zillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™, StreetEasy® and Retsly™. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads and Retsly are trademarks 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 more than 870 metros, 2,400 counties, and 23,000 ZIP codes across the nation. 
[ii] 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.

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