The 10 markets with the highest rate of underwater luxury homes have seen those rates fall

Underwater Luxury Homes Rise Above the Tide

The tide is receding for luxury homeowners underwater on their mortgages.

In this year’s second quarter, 2.8% of mortgaged homes valued at $1 million or more were underwater, meaning the outstanding mortgage debt exceeds the current value of the property. That is down from 4.2% in the same period last year. Overall, 17% of homes at all price points are underwater, according to real-estate data site Zillow.Z -0.57%

Baltimore had the highest rate of underwater luxury homes at 5.8%, followed by Phoenix; Riverside, Calif.; Chicago; Atlanta; Orlando, Fla.; Tampa, Fla.; Detroit; St. Louis and Philadelphia.

Across these 10 markets, home values are down an average 24.6% from their respective peaks, said Stan Humphries, chief economist for Zillow. “What’s driving the large share of million-dollar homes with negative equity is how far home values have fallen,” he added.

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