By Cory Hopkins
Almost 2 million American homeowners were freed from negative equity in 2012, and the overall percentage of all homeowners with a mortgage in negative equity fell to 27.5 percent at the end of the fourth quarter, according to Zillow's fourth quarter Negative Equity Report. The falling negative equity rate is good news for struggling homeowners and is largely attributable to a 5.9 percent bump in home values nationwide last year to a median Zillow Home Value Index of $157,400. (When home values rise, negative equity falls.) At the end of 2011, 31.1 percent of homeowners with a mortgage were underwater, or more than 15.7 million people.
In the fourth quarter, Zillow determined where the American homeowners who were freed from negative equity in 2012 were located. Among the nation's 30 largest metro areas, those with the highest number of homeowners freed from negative equity last year were Phoenix (135,099 homeowners freed in 2012); Los Angeles (72,936 homeowners freed in 2012); Miami-Fort Lauderdale (70,484 homeowners freed in 2012); Dallas-Fort Worth (59,461 homeowners freed in 2012); and Riverside, Calif. (58,417 homeowners freed in 2012).
Still, despite the more than 1.9 million homeowners nationwide who found their way back above water last year, 13.8 million American homeowners are still struggling with negative equity. Many remain so far underwater that even the very high rates of appreciation experienced in many markets still can only bring them so far. In the Phoenix metro region, for example, despite more than 135,000 homeowners freed from negative equity last year, more than 300,000 homeowners -- or 40.4 percent of those with a mortgage -- remain trapped in negative equity. This is largely attributable to the fact that although home values in Phoenix rose 22.5 percent last year, they remain more than 44 percent below their peak. So for those who bought at the peak, even with rapid appreciation, they still have a long way to go.
Read the rest of this story on Zillow.
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By Cory Hopkins