A shrinking number of San Diego homeowners owe more money on their house than it is currently worth, according to Zillow's 2016 Q4 Negative Equity Report.
In San Diego, the percent of mortgaged homeowners in negative equity, or underwater decreased from 7.9 percent in 2015 Q4 to 6.1 percent in 2016 Q4. The term "underwater" is used to describe a homeowner who owes more on a mortgage than the home's current value.
While the decrease is significant, said real estate analyst Gary London, the numbers do not tell the whole story.
"What Zillow doesn’t tell you is what neighborhoods these underwater homes are in and those numbers would be almost entirely reflective of homes in the South Bay and East County," said London. "There will be very few homes within 10 miles of the coast that would be part of that overall percentage."
Even though the number is meant to reflect the region, London said, the issue of homeowners underwater is more acute in certain parts of the region than others.
"If you’re a North County homeowner, say you live in Carlsbad, San Marcos, certainly any of the coastal communities, you would find that these percentages would be way lower," London said. "If you were in Chula Vista, or El Cajon, you would find that these percentages would be high, and you would find that there would be more of these underwater homes like that."
"Where the problem continues to fester is in South County and East County, where the greatest trauma was felt in terms of underwater homeowners and sub prime," London added. "That’s the nuance here."
The other factor to the equation: how San Diego compares to the rest of the nation.
San Diego's declining number of underwater homeowners goes hand in hand with nationwide numbers. Across the U.S., fewer homeowners are underwater on their mortgages, though more than half of those owe more than 20 percent of more than what their homes are worth.
"We’re in relatively good shape," London said. "We’re not as good shape as the San Francisco, San Jose region, for instance, but we’re in a lot better shape than the Midwest or the rust belt cities."
By the end of 2016, 10.5 percent of homeowners with a mortgage were underwater, down from 13.1 percent the previous year, the report finds.
During that same year, 1.2 million homeowners who owed more on their house than it was worth were able to resurface; however, five million across the U.S. remain underwater.
In San Diego, 44.6 percent of underwater homeowners were within 20 percent of positive equity in 2016 - down nearly four percent from 48.3 percent the previous year, the report finds.
It's a number that means the market is coming closer to having fewer and fewer homeowners underwater, London said.
"To me, that means the market is within shooting distance of curing this problem almost completely," London said.
The San Diego region tends to be doing better than the nation because of the strong economy behind it, he said.
"So really the rule here is that the stronger the economy, the more people’s income, the more they're able to cure any problems with their housing and most importantly, the more value there is in housing, because housing prices have been up substantially in places where the economic growth is greatest, and you need to build new homes," London said.
Within two years, London said, San Diego could reach the peak bubble price point of 2006. That's another way of saying housing prices have appreciated to near historical highs.
Though San Diego's housing market is doing better, it's hard to compare it to other parts of the county.
"All real estate is local," London explained. "It’s very hard to compare San Diego to Indianapolis; there are a lot of other things that go on."
"(The numbers) don’t say much other than our economy and our housing market is stronger than Indianapolis (for example)," London added.