Negative equity declined in the second quarter, with 30.9 percent of U.S. homeowners with mortgages—or 15.3 million—underwater, according to the second quarter Zillow Negative Equity Report. That was down from 31.4 percent of homeowners with mortgages, or 15.7 million, underwater in the first quarter. The total amount of negative equity in the country declined by $42 billion in the second quarter to $1.15 trillion.
Among age groups, young people are more affected by negative equity than other groups, with nearly half (48 percent) of all borrowers under the age of 40 underwater. However, younger borrowers are less likely than older populations to be delinquent on their mortgages. Underwater borrowers between the ages of 20 and 24 are the least likely to be delinquent, with 5.9 percent more than 90 days late, compared with a 9.2 percent delinquency rate for all underwater borrowers.
"Rising home values in the second quarter caused a decline in the number of underwater borrowers, but young homeowners continue to be disproportionately affected by negative equity," said Zillow Chief Economist Dr. Stan Humphries. "We hear about tight inventory in many markets, and it's clear where this is coming from. Negative equity is trapping young people in their homes, preventing them from selling. These homes are likely the very starter homes potential first-time homebuyers are seeking."
Of the 30 largest markets tracked by Zillow, negative equity fell the most from the first to the second quarter in the Phoenix metro (from 55.5 percent to 51.6 percent) and the Miami-Ft. Lauderdale metro (from 46.4 percent to 43.7 percent). The Las Vegas metro continues to see the highest negative equity rate, with 68.5 percent of borrowers underwater. That was down from 71 percent in the first quarter.