Nearly 2 Million American Homeowners Freed From Negative Equity In 2012 Phoenix, Los Angeles and Miami Metros Had Most Homeowners Freed Last Year, According to Zillow; At Least 1 Million Additional Homeowners Nationwide Expected To Be Freed In 2013

SEATTLE, Feb. 21, 2013 /PRNewswire/ -- Negative equity continued to fall in the fourth quarter of 2012, dropping to 27.5 percent of all homeowners with a mortgage, compared with 31.1 percent one year ago, according to the fourth quarter Zillow® Negative Equity Reporti. Almost 2 million American homeowners were freed from negative equity over the course of the year.

Approximately 13.8 million homeowners with a mortgage were in negative equity, or "underwater," at the end of the fourth quarter, owing more on their mortgages than their homes are worth. That was down from 15.7 million in the fourth quarter of 2011. American homeowners with a mortgage were collectively underwater by more than $1 trillion at the end of 2012.

In 2012, national home values rose 5.9 percent year-over-year, according to the Zillow Home Value Index (ZHVI)ii, to a median value of $157,400. This jump in home values, coupled with sustained high foreclosure rates, were the main drivers for receding negative equity. Among the nation's 30 largest metro areas, those with the highest number of homeowners freed from negative equity last year were Phoenix (135,099 homeowners freed in 2012); Los Angeles (72,936 homeowners freed in 2012); Miami-Fort Lauderdale (70,484 homeowners freed in 2012); Dallas-Fort Worth (59,461 homeowners freed in 2012); and Riverside, Calif. (58,417 homeowners freed in 2012).

New this quarter, the Zillow Negative Equity Forecastiii predicts the negative equity rate among all homeowners with a mortgage will fall to at least 25.5 percent by the fourth quarter of 2013, freeing more than 999,000 additional homeowners nationwide. Of the 30 largest metro areas, the majority of these newly freed homeowners are anticipated to come from: Los Angeles (72,696 homeowners freed in 2013); Riverside (62,407 homeowners freed in 2013); Phoenix (43,044 homeowners freed in 2013); Sacramento (33,356 homeowners freed in 2013); and Dallas-Fort Worth (31,434 homeowners freed in 2013).

Zillow forecasts negative equity by applying anticipated appreciation or depreciation rates to a home, according to the most current metro and national Zillow Home Value Forecasts, and by assuming all other factors remain constant.

"As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets," said Zillow Chief Economist Dr. Stan Humphries. "But negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas. As a result, negative equity will remain a major factor in the market for the foreseeable future."

These results are from the fourth quarter edition of the Zillow Negative Equity Report, which looks at current outstanding loan amounts for individual owner-occupied homes and compares them to those homes' current estimated values. Loan data is provided by TransUnion®, a global leader in credit and information management. This is the only report that uses current outstanding loan balances on all mortgages when calculating negative equity. Other reports estimate current outstanding loan balance based on the most recent loan on a property (i.e., the original loan amount at time of purchase or refinance).

Metropolitan Area

Q4 2012: % of Homeowners w/ Mortgages in Negative Equity

# of Homeowners Freed From Negative Equity in 2012

Q4 2013: Forecasted Negative Equity Rate

Minimum # of Homeowners Expected to be Freed From Negative Equity in 2013iv

 UNITED STATES

27.5%

1,908,732

25.5%

999,601

New York

19.4%

17,394

19.1%

6,513

Los Angeles

24.3%

72,936

20.0%

72,696

Chicago

36.9%

41,208

37.3%

N/A

Dallas-Fort Worth, Texas

24.2%

59,461

21.3%

31,434

Philadelphia

23.8%

1,462

23.1%

7,356

Washington, DC

28.0%

45,207

25.8%

24,911

Miami-Fort Lauderdale, Fla.

39.6%

70,484

37.0%

23,674

Atlanta

49.5%

49,827

47.9%

17,255

Boston

16.9%

30,495

15.6%

10,765

San Francisco

23.3%

39,496

19.5%

25,776

Detroit

43.4%

57,396

41.4%

17,197

Riverside, Calif.

43.8%

58,417

34.5%

62,407

Phoenix

40.4%

135,099

34.8%

43,044

Seattle

33.5%

32,457

29.9%

23,441

Minneapolis-St. Paul, Minn.

34.6%

29,518

32.8%

12,808

San Diego

28.3%

31,894

23.4%

22,788

Tampa, Fla.

41.5%

34,359

40.0%

7,775

St. Louis

26.9%

23,348

27.0%

N/A

Baltimore

27.7%

11,529

26.5%

6,265

Denver

20.0%

53,848

18.0%

10,509

Pittsburgh

14.0%

8,767

13.2%

3,403

Portland, Ore.

28.0%

26,355

24.7%

13,799

Sacramento, Calif.

41.7%

32,195

32.9%

33,356

Orlando, Fla.

45.3%

32,650

43.3%

7,286

Cincinnati

27.2%

16,034

26.8%

1,830

Cleveland

29.8%

13,818

29.1%

2,965

Las Vegas

59.2%

36,876

56.7%

8,435

San Jose

16.1%

17,330

13.2%

8,062

Columbus

28.8%

19,905

27.7%

3,620

Charlotte

33.0%

13,513

32.9%

325

 

About Zillow:
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 350 markets at Zillow Real Estate Research. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage Marketplace, Zillow Rentals, Zillow Digs™, Postlets®, Diverse Solutions®, Buyfolio™, Mortech™ and HotPads™. The company is headquartered in Seattle.

Zillow.com, Zillow, Zestimate, Postlets and Diverse Solutions are registered trademarks of Zillow, Inc. Buyfolio, Mortech, HotPads and Digs 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 over 800 metros, 2,300 counties, and 22,900 ZIP codes across the nation.

ii The Zillow Home Value Index is the median Zestimate® valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. The Home Value Index at the national level includes data from over 80 million homes in almost 3,000 counties and over 850 core-based statistical areas. It is expressed in dollars and is for a particular geographic region.

iii The Zillow Home Value 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.

iv Some metro areas may be marked "N/A" in this column. Home values are expected to continue to fall in these metros, which will lead to a net increase in the number of homeowners with a mortgage who are in negative equity. While some homeowners in this metro will be freed from negative equity, we expect more homeowners to enter negative equity in the coming year when looking strictly at home value changes and not considering pay downs in mortgage principal or foreclosure activity.

SOURCE Zillow, Inc.



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