How many home owners in Seattle are underwater?

The housing downturn left a lot of home owners underwater on their mortgages. Their home values declined below what they owe on their mortgages, making it difficult to sell the home unless they have access to extra cash to payoff their mortgage.

Zillow tracks negative equity across the US by looking at estimated home values and comparing them to mortgage balances. Here is a chart that shows how home owners are faring in Seattle in the fourth quarter of 2012.

Across the US, the negative equity rate fell in the fourth quarter to 27.5% of all homeowners with a mortgage, down from 31.1% in the fourth quarter of 2011. Negative equity rates, while still high, have been declining steadily in the Seattle area, primarily driven by appreciation in home prices over the last year.

  • Q4 2012 – 33.5% of owner-occupied homes with a mortgage in negative equity
  • Q3 2012 – 34.2% of owner-occupied homes with a mortgage in negative equity
  • Q2 2012 – 37.8% of owner-occupied homes with a mortgage in negative equity
  • Q1 2012 – 39.6% of owner-occupied homes with a mortgage in negative equity

Negative equity is a very large factor contributing to seller’s reluctance to list their homes for sale. Most sellers with underwater mortgages do not have the funds available to sell their home. These numbers are declining quite nicely in the Seattle area, but it will remain a drag on listing inventory until more home owners are freed from their underwater loans.