U.S. Negative Equity Falls to 17 Percent

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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

Aug 26, 2014

/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: 

SEATTLE, August 26, 2014 – 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.

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. 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.

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