About 11 percent of U.S. homeowners were underwater on their mortgage during the third quarter, down from 13.4 percent a year prior, Zillow reports. That’s great news if you consider where things stood a few years ago.
Back in early 2012, about 15.7 million Americans owed more on their mortgages than what their property was worth. Now it’s 5.3 million. There are still areas of high negative equity—Chicago and Las Vegas have rates of 17 and 16.8 percent, for example. But things are generally getting better.
Rising property values have helped pull more homeowners back to positive equity, which could allow them to sell or trade up to a nicer home. Keep in mind, about 26 percent of homeowners with a mortgage have less than 20 percent equity, so they’re in what Zillow calls “effective negative equity” because it would be tough for them to go and buy a new house.
Nationally, the housing market is about 2.7 percent below the recent peak.
“As the housing market recovers and home values rise, the number of homeowners underwater on their mortgages continues to drop,” said Dr. Svenja Gudell, Zillow’s chief economist.
“In addition to the individual homeowners who are underwater, negative equity affects the housing market as a whole, so this is good news not only for these owners, who are now able to either sell their home or at least regain some financial stability, but also for buyers who may find more options now. I expect homes will gain value steadily, for solid economic reasons, and that negative equity rates will continue to fall.”