The national negative equity rate fell in the first quarter, to 25.4 percent of all homeowners with a mortgage, according to a report from real estate portal Zillow. In the Boston area, negative equity rates were sharply below national averages, dropping to 15.9 percent in the first quarter of 2013 from 16.9 percent in the fourth quarter of 2012.
Zillow’s report emphasized that despite more homeowners getting back into the black, negative equity was still holding back the housing recovery, as many people who could sell their homes for a profit would still not make enough to provide a down payment on their next home. According to Zillow’s estimates, an additional 18.2 percent of homeowners in the U.S. and 18 percent of Boston homeowners are in this "near negative" equity category.
Altogether, that means that 13 million homeowners in the U.S., or 43.6 percent, cannot afford to move, contributing to the shortage of inventory on the market, Zillow said. In the Boston metro area, 129,671 households, or 33.9 percent of homeowners, can’t afford to move, according to the site’s figures.
"Reaching positive equity, even barely, is an important milestone. But things like real estate agents’ fees and a down payment for the next home traditionally come out of the proceeds from the prior home’s sale. Without enough equity, these costs will instead have to come out of a homeowner’s pocket, leaving many still stuck," said Zillow Chief Economist Stan Humphries in a statement.
"Looking at the effective negative equity rate could explain why recent, healthy declines in the number of underwater borrowers haven’t yet translated into more homes for sale. The only cure is patience, as rising home values continue to build equity to the point where more homeowners can realistically sell," Humphries said.
Among the 30 largest metro areas covered by Zillow, those with the highest effective negative equity rate, including homeowners with 20 percent equity or less, include Las Vegas (71.5 percent); Atlanta (64.1 percent); and Riverside, Calif. (59.7 percent).
Zillow predicts that negative equity will continue to decline through the beginning of next year, dropping an additional 1.9 percent across the country and putting an additional 1.4 million homeowners back in positive territory.
However, its projections for the Boston area were less positive, with the negative equity rate declining only 0.5 percent to 15.4 percent by the first quarter for 2014, lifting a mere 3,619 local households back into the black.
