By Nora Tooher
The number of Cleveland area “underwater mortgages” has declined by almost 10 percent since the numbers peaked in the first quarter of 2012.
Zillow states that 24.1 percent Cleveland-area homeowners are still underwater, meaning they owe more on their homes than the houses are worth. But 39,771 Cleveland-area homeowners have come out of the red as of September, according to Zillow.
Nationwide, the number of underwater homeowners decreased at its fastest pace ever in the third quarter, according to Zillow. About 10.8 million, or 21 percent of all homeowners, were underwater at the end of the third quarter, down more than 4.9 million from the first quarter of 2012.
The percent of delinquent owners of homes with a mortgage in negative equity varies greatly among the nation’s largest metros. In San Jose, Calif., it’s 7.6 percent; Boston, 12 percent; Los Angeles, 13.2 percent; Portland, Ore., 16.9 percent and Seattle, 21.9 percent.
Large metros with the highest negative equity rate in the third quarter included Las Vegas, 39.6 percent; Atlanta, 38.2 percent; Orlando, 34.2 percent; Chicago, 32.2 percent; Tampa, Fla., 32 percent; Detroit, 31.3 percent; Miami-Fort Lauderdale, Fla., 29.7 percent; Riverside, Calif., 28 percent; Phoenix, 25 percent and St. Louis, 24.3 percent.
Increasing home values are driving down negative equity, with many underwater homeowners coming up for air, especially in the West and Southwest.
Among the 30 largest metro areas covered by Zillow, those with the greatest decline in the number of underwater homeowners since their peak include San Jose, Calif., down 66.4 percent from the peak; Denver, down 63.3 percent from the peak and San Francisco, down 59.6 percent from the peak.
Despite more homeowners getting into the black, Zillow emphasized that negative equity will remain a factor for the foreseeable future. Negative equity rate reduction is expected to slow in the fourth quarter and next year as home value appreciation moderates.