SEATTLE (3/23/15)--Despite much of the housing market seeing steady home-price appreciation recently, the national negative equity rate has largely remained unchanged, according to Zillow's negative equity report from the fourth quarter.

The reason: home-price increases have not trickled down to the lowest-priced homes, which are the most likely to be underwater (Housingwire.com March 20).

In the fourth quarter, the report found, the negative equity rate deteriorated in 21 of the top 50 U.S. markets, while nationally home values climbed 6% on an annual basis.

"Higher negative equity rates have become the new normal," said Stan Humphries, Zillow chief economist. "We've long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately that's exactly what we're seeing.

"Compounding the problem is the fact that negative equity is decidedly not an equal opportunity predator, and looms larger over the bottom 10% of homes, where homeowners are least prepared to withstand the assault."

In Atlanta, for example, 49% of homes in the bottom-third of home values have fallen into negative equity, compared with 11% of homes in the top-third.

On a national basis, 16.9% of all homes with a mortgage are in negative equity; a number expected to fall to 15.4% by the end of 2015.

Among large U.S. metros, Virginia Beach (28.3%), Jacksonville (27%), Las Vegas (26.4%) and Atlanta (26.1%) experienced the highest rates of negative equity in the fourth quarter.

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