San Diego may be facing a housing affordability crisis, but there’s a silver lining — fewer homeowners are “underwater” on their loan.
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A new report from the online real estate site Zillow shows that San Diego had one of the lowest negative equity rates nationwide in the first quarter, with only 8.6 percent of homes, or 39,812 in all, worth less than the amount owed on the mortgage.
By contrast, nearly one home in five in Phoenix remains underwater, a total of 146,948, and in the smaller Las Vegas market, one in four homes were underwater, a total of 83,476.
Eight metro areas had lower negative-equity rates than San Diego, including San Francisco, San Jose and Los Angeles.
The national negative equity rate dropped to 15.4 percent in the first quarter. A year ago, the rate was 18.8 percent.
At the peak of the real estate crisis in 2008, more than 15 million American homeowners owed more on their mortgages than their homes were worth, putting them in negative equity.
Despite the improvement, Zillow Chief Economist Stan Humphries expressed concern that it was homes at the low end of the market that remained underwater.
“Because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt,” he said. Potential first-time buyers have difficulty finding affordable homes for sale because those homes are stuck in negative equity. And owners of those homes can’t move up the chain because they’re stuck underwater in the entry-level home they bought years ago.”
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