Brought to you by
KIRO Radio's Tom Kelly digs deep into the Puget Sound real estate market
Real Estate

Nearly one-third of Seattle mortgages still underwater

Despite increasing prices, nearly one-third of all Seattle-area homeowners with mortgages owe more than the value of their homes, according to a new survey by Seattle-based Zillow.

The local negative equity ("underwater") percentage of 31.2 is greater than the national negative of 25.4 percent of all homeowners with a mortgage. Another 18.2 percent of homeowners with mortgages, while not technically underwater, likely do not have enough equity to afford to move, Zillow reported.

"Reaching positive equity, even barely, is an important milestone," said Stan Humphries, Zillow's chief economist. "But things like real estate agents' fees and a down payment for the next home traditionally come out of the proceeds from the prior home's sale. Without enough equity, these costs will instead have to come out of a homeowner's pocket, leaving many still stuck."

Slightly more than 13 million homeowners with a mortgage were underwater at the end of the first quarter. When including homeowners with less than 20 percent home equity, the "effective" negative equity rate at the end of the first quarter was 43.6 percent, or a total of 22.3 million homeowners.

These homeowners likely cannot afford a down payment for a new home, tying them to their current homes and contributing to inventory shortages.

A homeowner technically reaches positive equity as soon as the market value of their home exceeds their outstanding loan balance. But listing a home for sale and buying a new one generally requires equity of 20 percent or more to comfortably meet related costs.

Top Stories

  • Graffiti in Seattle
    Vandalism at Seattle's Gas Works Park underscores an ongoing battle with police and taggers

  • History of Seafair
    We take a look back at how Seafair became a Seattle tradition
ATTENTION COMMENTERS: We've changed our comments, but want to keep you in the conversation.
Please login below with your Facebook, Twitter, Google+ or Disqus account. Existing MyNorthwest account holders will need to create a new Disqus account or use one of the social logins provided below. Thank you.
comments powered by Disqus
Mortgage Calculator
Enter Your Details & Click the Calculate Button
Loan Amount $
Annual Interest Rate %
Term of Loan Years
Number of Payments
Monthly Payment $
Brought to you by

This is not a commitment to lend. Terms subject to change without notice. Applicant must qualify to receive credits. A division of Pinnacle Capital Mortgage Corp. WA CL 81395, Equal Housing Lender, MLO 70765.
Listen to the show
Hear Real Estate Today on KIRO Radio
Join Tom Kelly every Sunday at 9am on KIRO Radio to talk Puget Sound real estate.

Sign up for breaking news e-mail alerts from MyNorthwest.com
In the community
Do you know an exceptional citizen who has impacted and inspired others?
KIRO Radio and WSECU would like to recognize six oustanding citizens this year. Nominate them to be recognized and to receive a $2,000 charitable grant.