A weight lifted: Las Vegas no longer has greatest share of debt-laden homes in U.S.

Sam Morris

House flipping was a hallmark of last decade’s real estate bubble, when investors, backed by easy money, bought homes and sold them for profit a short time later. Few places got as crazed with flipping as Las Vegas.

For the first time in more than four years, Las Vegas does not have the highest rate of underwater homeowners in the country.

But only by a hair.

An estimated 20.2 percent of Las Vegas-area homeowners with mortgages were underwater — meaning their debt outweighed their home’s value — in the quarter ending March 31, according to a new report from home-listing service Zillow.

That was second highest among the 35 metro areas listed in the report. Chicago was No. 1, at 20.3 percent.

Nationally, 12.7 percent of borrowers are underwater, Zillow said.

A poster child for the housing boom and bust, Las Vegas had the highest rate of upside-down borrowers in the country from the second quarter of 2011, when Zillow started tracking the topic, through the fourth quarter last year, the Seattle-based company said.

Its rate peaked in the first quarter of 2012 at 71 percent — more than double the U.S. peak of 31.4 percent that same quarter.

The problem has eased considerably, locally and nationally, thanks to rising home values. But in some metro areas, underwater rates have shrunk to single digits, including in the tech-heavy San Francisco Bay area.

Just 4.4 percent of borrowers in San Francisco were underwater last quarter, and in San Jose, only 2.8 percent were upside-down, Zillow reported.

Those cities were the only ones in the report with underwater rates below 5 percent.

Real Estate