PhotoThe housing market has recovered to the point that many homes now cost more than they did at the height of the housing bubble.

But real estate varies from market to market, and there are quite a few homes that were purchased during the bubble days and are nowhere near to those once heady values. And that's bad news for the consumers who purchased them.

While each quarter there are fewer homeowners who owe more on a mortgage than their home is worth, the latest data from Zillow shows many of those underwater homeowners have a long way to go. The numbers show about half of those who are still underwater owe at least 20% more than their homes are worth.

At the end of last year, 10.5% of homeowners with a mortgage were underwater, an improvement from the 13.1% who were underwater the year before. At the height of the housing crisis, in the first quarter of 2012, 31.4% owed more than their homes were worth.

Big improvements

Zillow reports homes in the New York metro area have made a big improvement over the last year. So have homes in the Los Angeles area. There, only 5.5% of homeowners are still underwater.

But in the Chicago metro, more than 16% still owe more than their homes are worth. It's 14% in Baltimore.

When a homeowner is underwater on a mortgage, it means he or she can't sell their home without having to make a very large cash payment to the lender at settlement. That keeps a lot of houses from coming on the market, leading to the very tight inventory situation we now have in many parts of the country.

Persistent reminder

"Negative equity is one of the most persistent reminders of the long-term losses suffered when the housing market collapsed," said Zillow Chief Economist Dr. Svenja Gudell. "Accelerating home value appreciation over the past few months was a blessing to owners who have been underwater since the housing bubble burst, but not all underwater owners were able to ride that wave to positive equity.”

The bad news for distressed homeowners? Gudell says they aren't going to get their heads above water any time soon. She predicts “a long wait before returning to a positive balance on their home loans."

CoreLogic, meanwhile, is a bit more optimistic. Analyzing the same data, it finds that fewer than 8% of mortgaged homes are still underwater.

“Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Frank Nothaft, chief economist for CoreLogic.

In addition to price appreciation, Nothaft says a decade of mortgage payments have reduced principal amounts. He says about 25% of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.

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