Due mostly to rising home prices, the percentage of U.S. residential mortgages that were in negative equity or ‘underwater’ at the end of the first quarter fell to 19.8%, or 9.7 million, according to CoreLogic's first quarter home equity report.
That is down from 21.7% compared to the fourth quarter of 2012 and down about 25% from the fourth quarter of 2011.
Looking at the 50 states, Nevada had the highest percentage of mortgaged properties in negative equity at 45.4%. Looking at the major metropolitan areas, the Tampa-St. Petersburg-Clearwater, Fla., region had the most mortgages underwater at 44.1%.
About 850,000 residential properties in the U.S. returned to a state of positive equity during the first quarter, according to CoreLogic. However, of the 39 million residential properties with positive equity, 11.2 million had less than 20% equity.
‘During the past year, 1.7 million borrowers have regained positive equity,’ said Mark Fleming, chief economist for CoreLogic. ‘We expect the pent-up supply that falling negative equity releases will moderate price gains in many of the fast-appreciating markets this spring.’
CoreLogic notes that the recovery is still far below peak home price levels. However, a lack of inventory in many areas, coupled with pent-up demand for single-family homes, should help close the gap.
Last month's report showed that 10.4 million mortgages were underwater. That is down from 10.5 million, or 21.7% of all residential properties with a mortgage, at the end of the fourth quarter of 2012.