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Zillow: More than 10% of Homeowners Still Underwater

The share of homeowners who owe more than their house is worth remains above 10% nationwide, according to data from Zillow's second quarter Negative Equity Report.

Zillow said Thursday that 12.1% of homeowners with a mortgage are underwater, which is down from 12.7% in the previous quarter and from 14.4% a year ago.

Effectively Underwater
In general, if the balance on a homeowner’s mortgage exceeds the value of their home, they’re underwater. But even those homeowners with some positive equity could still be trapped in the no-man’s land of “effective” negative equity. These homeowners may have some equity in their home, but likely not enough to sell it and use the proceeds to comfortably afford the down payment and other costs associated with buying a new home and selling their old one.

Including those homeowners with less than 20 percent equity in their home, the U.S. effective negative equity rate jumps to 28.3 percent of homeowners with a mortgage (figure 6). Large metro areas with the highest effective negative equity rates include Las Vegas (40.5 percent), Baltimore (37.1 percent) and Indianapolis (36.8 percent).

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