From the NYT:
The share of underwater mortgage holders — those who owe more than their homes are worth — has dropped by more than half since peaking in early 2012, according to new data from Zillow.
The decline was driven by rising home values at the lower end of the market, a turnaround from last year. Condominiums were the exception, as their values continued to lag nationwide.
As of the second quarter of 2015, Zillow’s data, which was released earlier this month, showed that 14.4 percent of homeowners with a mortgage had negative equity, compared with 31.4 percent in the first quarter of 2012, the peak.
While the current rate is still a long way from the historically normal negative equity level of around 2 percent, it is markedly lower than the nearly 17 percent rate at the end of last year. The negative equity rate did not budge in the second half of 2014, after dropping steadily for 10 consecutive quarters, because of declining values of lower-priced homes. Another Zillow report released in March had identified 21 major housing markets in which values for the bottom 10 percent of homes were falling, rather than rising. Since then, continued demand for affordable homes coupled with low inventory has helped increase values in the bottom third of homes, lifting more homeowners out of negative territory, said Svenja Gudell, the chief economist of Zillow.
Among the largest 35 metropolitan areas, the highest levels of negative equity were in Las Vegas (25 percent), Chicago (22 percent) and Atlanta (21 percent). New York fell just below the national average, with an overall rate of 12 percent. As in many markets, however, a wide gap separated the negative equity rates at the upper and lower ends of the New York market. About 23 percent of homeowners in the bottom third of homes (by value) were underwater, compared with just 5 percent in the top third, Ms. Gudell said.
The metro-area markets with the highest levels of negative equity for condominiums were Las Vegas (37 percent), Chicago (33 percent) and Orlando (30 percent). The New York metropolitan area (which includes the city, Long Island, northern New Jersey and Westchester) was well below the national average, with 13 percent of condo and co-op owners underwater.