The plight of underwater homeowners is proving to be pesky to resolve if Zillow's latest numbers on negative equity are correct.  The company said today that while homeowners with a larger mortgage balance than their homes were worth dropped from 16.9 percent in the fourth quarter of 2014 to 15.4 percent in the first quarter of this year, slowing home value growth means that many could be "trapped in their mortgages for years to come."

Of the estimated 7.9 million homeowners who were underwater in the quarter, Zillow says about 4 million owed their lenders 20 percent or more than the market value of their homes. This means it could be several years before those homes appreciate to a point that their owners could hope to break even on a sale.

At the peak of the real estate crisis more than 15 million homeowners were upside down on their mortgages, a number now halved by rising home prices, foreclosures, and short-sales. The current 15.4 percent rate is also down significantly from 18.8 percent in the first quarter of 2014.  Zillow said those remaining cases of negative equity will likely be the toughest ones to remedy.

More than 25 percent of those who own the least valuable third of homes were upside down, compared to about 8 percent of the most valuable third of homes.  Zillow pointed out that there is high demand for homes in the bottom third of the market.  However, a disproportionate number of those homeowners are simply stuck and can't afford to sell to buyers looking for homes in their price range.

The imbalance was even more pronounced in some markets. In Atlanta, for example, 46 percent of low-end homeowners were underwater, compared with 10 percent of high-end homeowners. In Baltimore, the negative equity rate was 32 percent at the low-end compared to 9 percent among the highest-value homes.

Zillow Chief Economist Dr. Stan Humphries said, "It's great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it's likely they may not re-gain equity for up to a decade or more at these rates.  And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt.  The logjam at the bottom is having ripple effects throughout the market, and as home value growth slows, it will be years before it gets cleared up. In the meantime, we'll be left with volatile prices, limited inventory, tepid demand, elevated foreclosures and a whole lot of frustration."

The rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015.  Las Vegas, Chicago and Atlanta had the highest rates while a smaller share were upside down in Miami and Detroit, but homeowners there were more deeply underwater; in each over 60 percent of negative equity exceeded 20 percent.