Zillow's new report on negative equity has some scary numbers, but are they more bark than bite?

According to the first quarter Zillow Negative Equity Report, 41.1 percent of homes in Chicago are in negative equity, while nationally, 31.4 percent are underwater. The data, though, is not as scary as it looks. Of those 31.4 percent, 90 percent are current in their mortgage and continue to make payments.

A new index from Zillow, the Negative Equity Report uses mortgage data from TransUnion on negative equity, LTV ratios and delinquency rates for more than 800 metros, 2,100 counties and 22,200 ZIP codes. Here are some of the other big findings from the report:

• Only 10.1 percent of the nation’s underwater borrowers are delinquent, meaning just 3.1 percent of homeowners are at high risk for foreclosure.
• Regional economic conditions continue to have the strongest impact on equity. States such as California, Florida, Nevada and Georgia, where the recession has been felt the hardest, have seen the most dramatic sways in equity.
• Thirty-six out of 812 metros show negative equity rates of more than 50 percent, with Las Vegas (71 percent), Phoenix (55.5 percent), Atlanta (55.2 percent), Orlando (53.9 percent) and Riverside (53.4 percent).

It’s beneficial to look at the widespread nature as a result of the economic downturn, not of anything inherently wrong with housing; as Zillow’s data shows, beyond the double-digit numbers, the situation is far more stable than it initially appears.

And that downturn, said Steve Lawrence, Baird & Warner’s branch manager for Lake County, is something housing is still slowly recovering from.

Though there is no “impending doom” for housing, Lawrence said, negative equity numbers do need to improve for the housing market to adequately recover, because some homeowners who need to sell simply cannot, given the depressed values in their market.

So though agents should not fear another wave of foreclosures, it will be another few years of depressed prices.