The national negative equity rate fell to 21% of all homeowners with a mortgage in the third quarter, down from its Q1 2012 peak of 31.4%, according to a report released Thursday by Zillow
. In the third quarter, more than 1.4 million homeowners got their mortgages above water, and nearly 5 million have been freed from negative equity since the beginning of 2012, Zillow reported.
The fall-off in negative equity during the third quarter was driven by high rates of home value appreciation, Zillow reported. Sacramento saw the highest level of appreciation at 34.1%. Also among the top areas for price appreciation were Las Vegas (33.3%), Riverside, Calif. (31.8%), San Francisco (25%) and Detroit (23.3%).
However, about 10.8 million homeowners are still underwater, and the national effective negative equity rate – in which the loan-to-value ratio is more than 80% -- is 39.2%. Not all of those homeowners are underwater, but they don’t have a lot of equity in their homes – making selling and buying a new home difficult, Zillow reported.
The percentage of underwater homeowners fell at the fastest pace on record in the third quarter, according to data released Thursday.