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A blog about the economy and the Sacramento-area real estate market.

August 9, 2010
Zillow: Negative equity rate receeding across Sacramento

The Sacramento region's negative equity rate is still falling - down to 38.1 percent during the second quarter of 2010, Seattle-based online evaluation service Zillow.com reported this morning.

Negative equity describes people who owe more than their homes are worth. It's also referred to as "being underwater" or "upside down." The phenomenon, which has especially plagued people who bought or refinanced during the housing boom, prevents them from being able to refinance. They're also still stuck paying boom-era mortgages for houses that are worth much less. That makes it tempting for many to walk away.

The second quarter's 38.1 percent collective negative equity rate for El Dorado, Placer, Sacramento and Yolo counties is down from 40 percent in the first quarter.

A year ago in the second quarter it was 45.2 percent.

Here is the release this morning showing figures for metros nationally.

Negative equity is falling for several reasons. One is that some people who had negative equity a year earlier lost their homes to foreclosure or sold them in short sales. That takes them off the list. But another reason, says Zillow, is that there have been fewer foreclosures. That means home values haven't been crashing as fast as they did before. In some cases they're rising. All of this combines to slowly reduce the rate of people in this unfortunate condition.

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