The number of borrowers in negative equity has declined by over 500,000 borrowers this year, CoreLogic reports. According to the data provider, 10.8 million, or 22.5%, of all residential properties with mortgages were in negative equity at the end of the third quarter – down from 11 million and 23% in the second quarter.
The decrease is due primarily to foreclosures of severely negative-equity properties rather than an increase in home values, CoreLogic explains.
‘The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity,’ says Mark Fleming, chief economist with CoreLogic.
In addition to the 10.8 million underwater borrowers, 2.4 million borrowers had less than 5% equity in the third quarter. Together, negative equity and near-negative -quity mortgages accounted for 27.5% of all residential properties with a mortgage nationwide.
Negative equity remains concentrated in five states: Nevada, which had the highest Negative-equity percentage, with 67% of all of its mortgaged properties
underwater, followed by Arizona (49%), Florida (46%), Michigan (38%) and California (32%).
The largest declines in negative equity were concentrated in the hardest-hit states. Alaska experienced the largest decline, falling 1.8 percentage points, followed by Nevada (-1.6), Arizona (-1.4), California (-1.2) and Florida (-0.9). Idaho and Alabama, currently the top two states for home-price depreciation, are the only states with noticeable increases.