It means that 9.1 million residential properties were seriously underwater where the combined loan amount secured by the property is at least 25% higher than the property’s estimated market value.
Seriously underwater homes are now at their lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012. The recent peak in negative equity was the second quarter of 2012, when 12.8 million properties, some 29% of all properties with a mortgage were seriously underwater.
The number of equity rich properties, that is homes with at least 50% equity, held steady from the first quarter at 9.9 million in the second quarter of 2014, representing 18.8% of all properties with a mortgage.
Another 8.8 million properties were on the verge of resurfacing in the second quarter of 2014, with between 10% negative equity and 10% positive equity, representing 17% of all properties with a mortgage, up from 8.5 million or 16% in the first quarter of 2014.
The data also shows that fewer distressed properties were in negative equity in the second quarter, with 44% of all properties in the foreclosure process seriously underwater, down from 45% in the first quarter of 2014 and down from 57% in the second quarter of 2013.
The share of foreclosures with positive equity decreased to 34% in the second quarter, down from 35% in the first quarter. Top states for foreclosures with equity include Colorado, Texas, Oklahoma, Hawaii and Louisiana.
‘Home price appreciation has slowed in the last few months in many of the markets with the most underwater homes, slowing the pace at which home owners are recovering equity lost during the recession,’ said Daren Blomquist, vice president at RealtyTrac.
‘For instance home price appreciation in California was at 16% in May 2014 compared to a high of 31% in July and August of 2013. In Arizona, home price appreciation has slowed to 6% annually compared to a high of 24% last year,’ he explained.
‘In addition many of the properties that are seriously underwater are in a deep negative equity hole that will take some time to dig out of. The average loan to value on the 9.1 million homes seriously underwater was 133% and the average loan to value on the homes in foreclosure that are seriously underwater was 134%,’ he added.
States with the highest percentage of residential properties seriously underwater in the second quarter were Nevada at 32%, Florida at 30%, Illinois at 30%, Rhode Island at 29% and Michigan at 27%.
Major metropolitan statistical areas with the highest percentage of residential properties seriously underwater were Lakeland, Florida, at 37%, Las Vegas and Cleveland both at 35%, Palm Bay-Melbourne-Titusville in Florida at 32%, and Chicago, Cape Coral-Fort Meyers in Florida and New Haven-Milford all at 30%.
Major metro areas with the highest percentage of resurfacing equity, between minus 10% and plus 10%, were Colorado Springs at 28%, and Albuquerque, Lancaster, El Paso, Salt Lake City and Worcester all at 22%.
Major metro areas with the highest percentage of equity rich properties, that is those with at least 50% equity, were San Francisco at 37%, Honolulu at 36%, Los Angeles at 32%, New York at 29%, and Oxnard and San Diego at 28%.
