Friday, August 27, 2010

Underwater Homeowners Decline to 11M

The number of underwater homeowners has declined for the second consecutive quarter.

The research firm CoreLogic reports that 11 million borrowers owed more on the loan than their home was worth at the end of June. That equates to 23 percent of all residential properties with mortgages, and is down from 11.2 million, or 24 percent, at the end of March.

It seems like good news on the surface, but the company says foreclosures, rather than meaningful price appreciation, were the primary driver behind the change in negative equity.

In addition to the 11 million homeowners already underwater, another 2.4 million borrowers had less than five percent equity in their homes at the end of the second quarter, according to CoreLogic.

Negative equity remains concentrated in five states. Nevada had the highest percentage of negative equity in Q2 with 68 percent of all of its mortgaged properties underwater, followed by Arizona (50 percent), Florida (46 percent), Michigan (38 percent), and California (33 percent).