Today’s homeowners owe $1.2 Trillion more than their homes are worth, real estate data hub Zillow reported Thursday. But the good news is: 90% are paying their mortgages on time, therefore the negative equity is a “paper loss.”
“While it was disappointing to see negative equity numbers remain so high, it is important to note that negative equity remains only a paper loss for the vast majority of underwater homeowners,” said Zillow Chief Economist Stan Humphries. “As home values slowly increase and these homeowners continue to pay down their principal, they will surface again.
The number of underwater homeowners tallied in the first quarter of 2012 amounts to nearly 16 million, Zillow reports, or roughly one-third of all homeowners in the U.S. Foreclosure is not imminent for the vast majority, but the negative equity figure still poses a risk, Zillow’s economist says.
“Negative equity remains an issue for the housing market as a whole, and poses a risk to any recovery,” Humphries said. “Not only does negative equity tie many to their homes, by making homeowners unable to move when they may want to, but if economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures.”
In terms of the amounts owed for most, many are not “deeply” underwater. Nearly 40% of those who are owe between 1% and 20% of what their home is worth. Regionally, Nevada has the highest percentage of negative equity, with 66.9 percent of all homeowners with mortgages underwater. Arizona (52.3 percent), Georgia (46.8 percent), Florida (46.3 percent) and Michigan (41.7 percent) also have highest percentages of homeowners in negative equity, according to the Zillow data.
Written by Elizabeth Ecker
