Negative equity falls in second quarter

There were 15.3 million homeowners with underwater mortgages in the United States in the second quarter, or about 30.9 percent of homeowners with mortgages, according to the Zillow Negative Equity report. That represented a drop from a 31.4 percent rate of underwater homeowners in the first quarter. The total amount of negative equity in the U.S. fell by $42 billion in the same period, to approximately $1.15 trillion. “Rising home values in the second quarter caused a decline in the number of underwater borrowers,” said Dr. Stan Humphries, chief economist at Zillow. “We hear about tight inventory in many markets, and it’s clear where this is coming from. Negative equity is trapping young people in their homes, preventing them from selling. These homes are very likely the very starter homes potential first-time homebuyers are seeking.” — Alexander Britell