Based on a new report from Zillow, the percentage of homeowners who are “underwater” on their homes is below 10% for the first time since the fiscal crisis of more than a decade ago, hitting 9.1% in Q4 of 2017.
Of course, that means that one out of close to every 10 or 4.4 million homeowners in the U.S. still owed more on their homes than they were worth in the fourth quarter. In fact, more than 700,000 owe twice what their homes are now worth.
According to a statement by Zillow, this places “a drag on the overall housing market,” primarily because underwater homeowners tend to hold on to their homes, waiting for their home values to increase. This affects the housing inventory which continues to be low in many areas of the country.
When the housing market collapsed, the typical U.S. home lost more than a quarter of its value, according to Zillow, leaving many homeowners underwater. But now that national home values are at record highs, many owners who had held on to their homes throughout the housing crisis are once again above water on their mortgages.
Virginia Beach, an oceanfront city in Virginia, had the highest percentage of underwater homes in the fourth quarter of 2017 with 44.5% of homeowners owing more than their homes were worth. Of those, 17.4% owed twice the value of their homes. The total number of homes underwater was just under 50,000.
But while Virginia Beach topped the list percentage wise, Chicago had by the far the highest number of homes underwater, 253,725. Just over 34% of homeowners were underwater in this third most populated city in the U.S.
Other cities in the top five on the Zillow list by percentage of underwater homes were:
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