2.5m us homes no longer underwater

14.5 per  cent of residential properties with a mortgage were still in negative equity at the end of the three month period – a drop from the previous quarter, when 19.7 per cent of homes were underwater.

Negative equity means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

The aggregate value of negative equity was $428 billion in June 2013, down from $576 billion in March. This decrease has largely been driven by rising house prices.

Of the 41.5 million US homes with positive equity, 10.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. Under-equitied mortgages accounted for 21.1 percent of all residential properties with a mortgage nationwide in the second quarter of 2013.

Nevada had the highest percentage of mortgaged properties in negative equity at 36.4 per cent, followed by Florida (31.5 per cent), Arizona (24.7 percent) and Michigan (22.5 per cent). Of the largest 25 metropolitan areas, Miami-Miami Beach-Kendall, Fla. had the highest percentage of mortgaged properties in negative equity at 36.5 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (33.8 per cent).

“Equity rebuilding continued in the second quarter of this year as the share of underwater mortgaged homes fell to 14.5 percent,” said Dr. Mark Fleming, chief economist for CoreLogic. “In just the first half of 2013 almost three and a half million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half.”

“Price appreciation obviously had a positive impact on home equity over the first half of 2013, especially the second quarter,” added Anand Nallathambi, president and CEO of CoreLogic. “Despite the substantial decrease in negative equity, there’s more ground left to gain with the 7.1 million U.S. residences that remain underwater.”