Negative equity rises in 21 of top 50 us markets

Detroit Photo: Gehad83

Home prices continue to climb in the US, but negative equity is still climbing, as underwater homes remain underwater.

Figures from Zillow reveal that negative equity is going up in 21 of the top 50 housing markets. 

Home values rose 5.9 per cent nationally last year, while the national negative equity rate is 16.9 per cent. In some markets in Florida and the Midwest, though, more than a quarter of mortgaged homes are underwater.

Low-end homes are far more likely to be worth less than the balance of their mortgage, which means they are far more likely to be further underwater than their high-end counterparts.

"Nationally, of the homeowners who are underwater, around half are only underwater by 20 percent or less, which is to say they are close to escaping negative equity," says Zillow's report.

Homeowners of lower-end homes, though, are not only more likely to be underwater but are also more likely to be severely underwater. Indeed, in the fourth quarter of 2014, 27.3 per cent of bottom-tier homes were in negative equity, compared to 15.4 percent of middle-tier homes and 9.1 percent of top-tier homes.

In Detroit, 50.2 per cent of homes in the bottom tier were underwater, compared to just 7 per cent of the top-tier homes. In Atlantic, 49 per cent of those in the bottom-tier are underwater, compared to just 10.7 per cent in the top tier.

Zillow highlights Philadelphia, Detroit, St. Louis and Chicago as metros that have seen an increase in the number of bottom-tier homeowners who are underwater, a trend it attributes to falling home prices among the lowest valued properties in those areas.