Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

20% of mortgages are underwater

By Les Christie, staff writer


NEW YORK (CNNMoney.com) -- More than 20% of the nation's mortgage borrowers owe more than their homes are worth.

At 21.5% for the third quarter, it is a small improvement over the previous quarter, when 23.3% of loans were underwater, according to real estate website Zillow.com.

This so-called negative equity is a hotly watched statistic because it is a prime predictor of foreclosure -- second only to loss of income.

"It is the paramount challenge facing housing markets," said Stan Humphries, Zillow's chief economist. "We already have had record levels of foreclosure and, combined with high unemployment, negative equity is very toxic to the market."

But don't cheer about the slight gains in the past three months. Most of the improvement comes because so many people lost their homes to foreclosure

In some markets, residents were helped by improving home prices. As prices rise, it narrows the gap between what homeowners owe and what they could sell for. As a result, hard-hit metro areas such as Merced, Calif., and Orlando, Fla., recorded huge declines in the number of underwater borrowers. Merced was down to 40% while Orlando fell to 64.6%.

In fact, most markets trended up. Only 25 of 142 markets surveyed lost ground, led by Lansing, Mich., where negative equity grew to 31.5%.

Neighboring Detroit also worsened, jumping up to 31.4%, as did Grand Junction, Colo., where the it grew to 31.2%.

Las Vegas continued to lead the nation, with 73.9% of all mortgage borrowers owing more than their properties are worth. In Phoenix, that total is 66.8%; in Orlando, 64.6%; and in Reno, 61.9%. To top of page


Overnight Avg Rate Latest Change Last Week
30 yr fixed3.83%3.80%
15 yr fixed3.16%3.14%
5/1 ARM3.57%3.54%
30 yr refi3.79%3.79%
15 yr refi3.14%3.13%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 24,651.74 143.08 0.58%
Nasdaq 6,936.58 80.06 1.17%
S&P 500 2,675.81 23.80 0.90%
Treasuries 2.36 0.01 0.38%
Data as of 3:40am ET
Company Price Change % Change
Bank of America Corp... 29.04 0.31 1.08%
General Electric Co 17.82 0.18 1.02%
Oracle Corp 48.30 -1.89 -3.77%
Micron Technology In... 42.40 0.16 0.38%
Microsoft Corp 86.85 2.16 2.55%
Data as of Dec 15

Sections

More than 5% of DACA recipients have started their own businesses since enrolling the program, according to a recent survey. More

Parents will get twice as large of a tax credit for each child next year, under a compromise hammered out by the House and Senate Friday ? although other changes to the bill mitigate the impact of that tax break. More

Uber is being sued by Waymo, Alphabet's self-driving car unit that was formerly part of Google. Waymo alleges that Uber stole trade secrets about its self-driving technology. More