Negative-Equity Share Drops Slightly

Almost one-third of all mortgaged properties were underwater as of June 30. According to data from First American CoreLogic, more than 15.2 million mortgages, or 32.2% of all mortgaged properties, were in negative-equity position.

June's negative-equity share, which was slightly lower than the 32.5% at the end of March, reflects the recent flattening of monthly home price changes, the company says. As of June, there were an additional 2.5 million mortgaged properties that were approaching negative equity. Negative-equity and near-negative-equity mortgages combined account for nearly 38% of all residential mortgages.

"Given that negative equity did not increase this quarter and home prices declines are moderating or flattening, we may be at the peak of the negative-equity cycle," says Mark Fleming, chief economist for First American CoreLogic. "However, until negative equity recedes and unemployment declines, mortgage risk will continue to be very elevated."

The aggregate property value for loans in a negative-equity position was $3.4 trillion. On a state-by-state basis, California had the highest aggregate value of underwater homes, at $969 billion.

Three states account for roughly half of all mortgage borrowers in a negative-equity position. Nevada (66%) had the highest percentage, with nearly two-thirds of mortgage borrowers in negative-equity. In Arizona (51%) and Florida (49%), about half of all mortgage borrowers were in a negative equity position. Michigan (48%) and California (42%) round out the top five states.

SOURCE: First American CoreLogic


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