Research firm CoreLogic (NYSE: CLGX) reported today that both the number and total value of residential properties with negative equity declined in the first quarter of the year. As a percentage of all properties with a mortgage, the negative equity rate fell from 25.2% (12.1 million properties) in the fourth quarter of 2011 to 23.7% (11.4 million properties). Nationally, the amount of negative equity decreased from $742 billion in the fourth quarter of 2011 to $691 billion in the first quarter of this year.
CoreLogic’s chief economist had this to say:
In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative equity share. This is a meaningful improvement that is driven by quickly improving outlooks in some of the hardest hit markets. While the overall stagnating economic recovery will likely slow housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk.
Underwater mortgage percentages vary widely, with Nevada posting the highest reading at 61% and North Dakota the lowest at 5.8%. Rounding out the five states with the highest percentage of underwater mortgages are Florida (45.1%), Arizona (43.4%), Georgia (37.2%), and Michigan (35.6%).
In addition to North Dakota, the other four states with the lowest percentage of underwater mortgages are West Virginia, Alaska, New York, and Montana. CoreLogic noted that the underwater percentage for homes valued at less than $200,000 is 31%, double the percentage of underwater properties valued at more than $200,000.
One bit of good news for homeowners who are only underwater by 5% or less: these properties could move into positive equity territory if home prices continue to improve this year.
CoreLogic’s full report is available here.