One in six homeowners in Sonoma County owe more on their mortgages than their homes are worth, half the number from a year ago, according to estimates in a new report.
Nearly 16 percent of the county's single-family homeowners were "underwater" on their mortgages in June, according to Zillow.com, a real estate Web site.
Only one metropolitan area in California had more homeowners on dry ground: San Jose, where almost 14 percent were underwater on their mortgages.
The problem peaked in Sonoma County a year ago, when 32 percent of homeowners — or roughly 32,000 homes — were stuck with "negative equity," Zillow estimated.
Today, that number appears to have been cut in half, although experts said there was no clear reason for such a strong drop.
Rising home prices and the removal of negative equity through foreclosures and loan modifications may have contributed to the change.
"There's just a lot of factors that go into this, and they're not all transparent to us," said Zillow spokeswoman Katie Curnutte.
Nonetheless, she noted that the improvement in Sonoma County was similar to that seen in such California communities as Merced, Modesto, Stockton and Vallejo. Merced, which made the largest percentage improvement, had a negative equity rate of 40 percent in June, compared to 72 percent a year ago.
Other analysts gave a mixed reaction to the report.
Steve Cochrane, managing director of Moody's Analytics near Philadelphia, said he found the county's reported improvement "puzzling."
"I think the bottom line is things probably are improving in Sonoma County," said Cochrane, who has prepared reports for the county's Economic Development Board. "But the degree of improvement … you may have to take these things with some caution."
Zillow this week reported that nearly 22 percent of U.S. homeowners were underwater in June, a drop of 1 percentage point from a year before. The new rate amounts to 12.6 million homes.
In comparison to Sonoma County, the negative equity rate varied considerably among California communities. Zillow reported rates of 50 percent for Vallejo, 38 percent for Sacramento, 37 percent for Napa, almost 20 percent for San Francisco and 17 percent for Los Angeles. The rate was nearly 17 percent for Santa Cruz and nearly 18 percent for San Luis Obispo.
High levels of negative equity is one factor driving the wave of foreclosures and short sales that have dominated the region's real estate market for the past two years.
Leslie Appleton-Young, chief economist for the California Association of Realtors, noted that Sonoma County's negative equity rate didn't seem that unusual.
"It's in the ballpark of those other cities," she said of the coastal communities and the Bay Area.
Appleton-Young suggested that in the Central Valley, the negative equity rate changed because so many homes were lost to foreclosure in the past year.
"The property owners were underwater, and they don't own the properties any more," she said. The new buyers don't have negative equity.
Mike Kelly, a real estate with Keller Williams in Santa Rosa, wondered if foreclosures may have affected the number of underwater homeowners in Sonoma County, too.
Asked his reaction to the negative equity rate for the county, Kelly replied, "I thought it would be actually more."
Zillow estimated that home values rose almost 2 percent in Sonoma County during the last year, greater than the increase for Merced. Still, Curnutte acknowledged that other communities had bigger jumps, including a nearly 6 percent jump in home values in San Francisco.