Joe Wilson's Silicon Valley Real Estate Blog

About one in every 10 homes in Santa Clara and San Mateo counties has negative equity, according to Zillow's third-quarter report on home values.

That's about half of what it was when Zillow began tracking underwater mortgages in the first quarter of 2009, when foreclosures and plummeting home prices had home-owners reeling.

In the third quarter, which just ended, 11 percent of all single family homeowners with mortgages in Santa Clara County had negative equity, Zillow reported, down from 22.5 percent in early 2009. In San Mateo County, 10.5 percent were underwater, down from 16.7 percent at the start of last year, according to Zillow.

Nationally, 22.3 percent of single-family homeowners with mortgages were underwater, Zillow reported. Las Vegas has the highest percentage, with 80 percent in negative equity. About one in five homes are underwater in the nine-county Bay Area, down from 30.5 percent in early 2009.

The percentage of underwater homeowners in the South Bay has been dropping steadily for months as a relentless stream of foreclosures and short sales eliminates underwater mortgages.