The number of homeowners who are underwater on their mortgages declined anew in the second quarter, but the remaining pain is being felt disproportionately by owners of low-price homes, according to a report released Tuesday.
About 28% of homes with a mortgage within the bottom third of home values were underwater at the end of the second quarter, meaning they were worth less than the balance of their mortgages, according to real-estate information service Zillow Inc. Z -1.38%. That compares with about 16% of homeowners in the middle tier and 9.2% in the top tier.
The high proportion of low-price, underwater homes could prevent owners from moving up to larger homes and thus put a damper on purchases by first-time home buyers.
Underwater homes have created an enormous amount of financial hardship and have been a drag on the economy ever since the housing bust. During the depths of the downturn, 31% of homes were underwater.
That figure has declined as the economy has recovered. Overall, the percentage of homeowners who were underwater in the second quarter dropped to 17% from 24% a year ago, the report said.
Information from The Wall Street Journal
