The share of homeowners with underwater mortgages continued its decline in the second quarter, according to the Zillow Negative Equity Report.
About 15.3 million homeowners with a mortgage were underwater, or 30.9 percent, a drop from 15.7 million or 31.4 percent.
The report also revealed that negative equity more often affects younger age groups, with nearly half (48 percent) of borrowers under 40 with an underwater mortgage.
Those between 30 and 34 however, were above that average, with 50.8 percent affected by negative equity. Among those over 50, negative equity was less prevalent for those in the older age category, with only 12.4 percent of people 75 or older affected by negative equity compared to 28.1 percent for those between 50 and 54.
While younger borrowers are more likely to be underwater, they are less likely to be delinquent compared to older groups.
According to the report, underwater borrowers between the ages of 20 and 24 have a serious delinquency rate (90 days or more past due) of 5.9 percent, while the overall rate is 9.2 percent for all underwater borrowers.
“Rising home values in the second quarter caused a decline in the number of underwater borrowers, but young homeowners continue to be disproportionately affected by negative equity,” said Zillow Chief Economist Dr. Stan Humphries. “We hear about tight inventory in many markets, and it’s clear where this is coming from. Negative equity is trapping young people in their homes, preventing them from selling. These homes are likely the very starter homes potential first-time homebuyers are seeking.”
Among the 30 largest markets Zillow tracks, Phoenix saw the steepest drop in negatively equity, falling from 55.5 percent to 51.6 percent. Miami-Ft. Lauderdale also saw a significant drop from 46.4 percent to 43.7 percent.
The Las Vegas metro continues to have a high percentage of mortgages counted as underwater. For the second quarter, its negative equity rate was 68.5 percent.
On the other hand, Boston had a negative equity rate of 15.6 percent.