There were 9.3 million U.S. residential properties deeply underwater in December 2013, according to RealtyTrac’s latest U.S. Home Equity & Underwater Report. This represented 19% of all properties with a mortgage.
Homes are in negative equity, or underwater, when homeowners owe more on their mortgages than their home is worth.
RealtyTrac, identifies homes with a combined loan amount that is 25% higher than the property’s market value, as deeply underwater.
December’s number was down from 10.7 million residential properties that were deeply underwater in September 2013, which represented 23% of all properties with a mortgage.
it was also down from a recent peak of 12.8 million residential properties that were deeply underwater, which represented 29% of all properties with a mortgage in May 2012.
We saw a surge in negative equity following the housing bust. But, “now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event,” writes Daren Blomquist at RealtyTrac.
“On the other end of the spectrum, the percentage of equity-rich homeowners is nearing a tipping point that should result in a larger inventory of homes listed for sale and give the overall economy a nice shot in the arm in 2014.”
But Blomquist did point out that for millions of those still underwater it could take years for them to regain equity. And that the longer they stay in negative equity they more likely it is that those homes will end up in negative equity.
Florida has the largest per cent of homes deep underwater at 34% or 1.7 million homes.
Here’s a look at negative equity profile since January 2012: