The ranks of homeowners owing more on their homes than the homes are worth have shrunk by more than half over the past four years, a further indication of the housing recovery since the bubble burst in 2006 and 2007.
According to data released Wednesday by Zillow, about 12.7 percent all homes in the U.S. had negative equity, also known as being underwater, in the first quarter. That's down from the 13.1 percent rate in the fourth quarter of 2015 and the 31.4 percent in the first quarter of 2012.
However, there's a wide disparity in underwater rates between the Rust Belt, which had four of the 10 regions with the highest rates, and the West Coast, which had five of the 10 areas with the lowest rates. The country's worst metropolitan area for negative equity? Chicago and its suburbs, which notched a 20.3 percent rate.
In California, the San Jose and San Francisco areas, whose economies benefit from their proximity to Silicon Valley, had the country's lowest negative equity rates of 2.8 percent and 4.4 percent, respectively. However, Las Vegas and some cities in Florida, which were hit hard by housing market meltdown, continue to struggle. Zillow estimates the negative equity rate in the Las Vegas area is 20.2 percent and more than 13 percent in the Miami and Tampa markets.
"When the housing bubble burst, the West Coast had more than its fair share of underwater homeowners," said Zillow Chief Economist Svenja Gudell in a press release. "But the strong local economy and job markets have significantly helped these housing markets recover, and several are now more expensive than they were during the housing bubble."
Added Gudell: "Other parts of the country didn't get those same benefits, and until market fundamentals improve, homeowners and buyers in these areas will be facing disproportionately higher levels of negative equity as they navigate the housing market."