Despite some promising signs for a housing recovery, more than one in four homeowners still have underwater mortgages — where they owe more money than their house is worth.
The good news is that number is on the way down. In the third quarter, 28.2% of U.S. homeowners had negative equity, down slightly from 30.9% in the second quarter, according to data from the quarterly Zillow Negative Equity Report.
Additionally, all 30 of the nation’s largest metro areas covered by the report saw their negative equity rate fall quarter-over-quarter.
Still, as Zillow Chief Economist Stan Humphries put it: “While we’re moving in the right direction, a substantial number of homes are still locked up in negative equity, unable to enter the existing re-sale market despite the desires of their owner.”
Even after the quarterly drop, the percentage of underwater mortgages in some cities is still double the national average. Let’s take at the 10 worst cities with negative equity in Q3: