Some 9.1 million homes were seriously underwater in the second quarter of this year, RealtyTrac, the nation’s leading source for comprehensive housing data, announced in its U.S. Home Equity and Underwater Report.
To be seriously underwater, the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value. This is the case with an estimated 17 percent of all properties with a mortgage, RealtyTrac reported.
The number of homes that were seriously underwater is at the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012, RealtyTrac said in a news release. The recent peak in negative equity was in the second quarter of 2012, when 12.8 million U.S. Residential properties representing 29 percent of all properties with a mortgage were seriously underwater.
Metro areas with the highest percentage of resurfacing equity – between negative 10 percent and positive 10 percent – were Colorado Springs at 28 percent, and Albuquerque, Lancaster, Penn., El Paso, Texas, Salt Lake City, and Worcester, Mass, all with 22 percent, according to RealtyTrac.
The group of equity-rich properties — those with at least 50 percent equity — held steady from the first quarter at 9.9 million in the second quarter of 2014, representing 18.8 percent of all properties with a mortgage.
Another 8.8 million properties were on the verge of resurfacing in the second quarter of 2014, with between 10 percent negative equity and 10 percent positive equity, representing 17 percent of all properties with a mortgage, up from 8.5 million representing 16 percent of all properties with a mortgage in the first quarter of 2014.
Fewer distressed properties had negative equity in the second quarter, with 44 percent of all properties in the foreclosure process seriously underwater — down from 45 percent in the first quarter of 2014 and down from 57 percent in the second quarter of 2013. The share of foreclosures with positive equity decreased to 34 percent in the second quarter, down from 35 percent in the first quarter. Top states for foreclosures with equity include Colorado, Texas, Oklahoma, Hawaii and Louisiana.
“Home price appreciation has slowed in the last few months in many of the markets with the most underwater homes, slowing the pace at which homeowners are recovering equity lost during the Great Recession,” said Daren Blomquist, vice president at RealtyTrac. “For instance home price appreciation in California was at 16 percent in May 2014 compared to a high of 31 percent in July and August of 2013. In Arizona, home price appreciation has slowed to 6 percent annually compared to a high of 24 percent last year.