As home values continue to rise, the national negative equity rate continued to fall in the second quarter, dropping to 23.8 percent of all homeowners with a mortgage, according to the second quarter Zillow Negative Equity Report. However, millions of homeowners remain so far underwater that it will take years for them to regain equity, even as home values continue their recovery. Approximately 12.2 million homeowners with a mortgage were in negative equity, or underwater, at the end of the second quarter, owing more on their mortgages than their homes are worth. That is down from 13 million homeowners in the first quarter and 15.3 million at the same time last year. Roughly one-third of homes are owned without a mortgage. The negative equity rate among all homeowners, both with and without a mortgage, was 16.7 percent at the end of the second quarter. Nationwide, more than half (57 percent) of homeowners in negative equity are underwater by 20 percent or more, and roughly one in seven (13.4 percent) owes more than twice what their home is worth. According to the most recent Zillow Home Value Forecast, home values are expected to rise 4.8 percent in the next year. Assuming appreciation at that rate going forward, it would take a homeowner underwater by 20 percent roughly four years to reach positive equity. "Widespread rising home values during the past year have helped chip away at negative equity nationwide, helping many homeowners who were only modestly underwater to come up for air. For those homeowners who are deeply underwater, though, there is still a long row to hoe," said Zillow Chief Economist Dr. Stan Humphries. "The frustratingly slow pace of negative equity declines in the face of such robust home value appreciation is a direct result of the fact that many people in the hardest-hit markets are underwater by an enormous amount. Because of this, negative equity will be a factor in these markets for years to come, constraining the supply of homes for sale and keeping people out of the market who might otherwise get involved." The "effective" negative equity rate, which includes those homeowners with a mortgage with 20 percent or less equity in their homes, fell to 41.9 percent, from 43.6 percent in the first quarter. Listing a home for sale and buying a new one generally requires equity of 20 percent or more to comfortably meet related expenses, including the down payment for a new home and associated closing costs, taxes and real estate agents' fees. Homeowners without enough equity may remain tied to their homes, even if they are not underwater. Among the 30 largest metro areas covered by Zillow, those with the highest percentage of mortgaged homeowners with negative equity in the second quarter include Las Vegas (48.4 percent), Atlanta (44 percent) and Orlando (39.8 percent). The second quarter Zillow Negative Equity Forecast predicts the negative equity rate among all homeowners with a mortgage will fall to at least 20.9 percent by the second quarter of 2014, lifting more than 1.9 million additional homeowners nationwide into positive equity. Of the 30 largest metro areas, the majority of these newly freed homeowners are anticipated to come from Los Angeles (89,677 homeowners), Riverside, Calif. (74,054 homeowners) and Atlanta (61,186 homeowners). These results are from the second 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).