Research firm CoreLogic (NYSE: CLGX) reported today that both the number and total value of residential properties with negative equity declined in the second quarter of the 2012. As a percentage of all properties with a mortgage, the negative equity rate fell from 23.7% (11.4 million properties) in the first quarter of 2012 to 22.3% (10.8 million properties). Nationally, the amount of negative equity decreased from $691 billion in the first quarter to $689 billion in the second quarter of this year.
CoreLogic’s chief economist had this to say:
The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year. Surging home prices this spring and summer, lower levels of inventory, and declining REO [real-estate owned] sale shares are all contributing to the nascent housing recovery and declining negative equity.
Underwater mortgage percentages vary widely, with Nevada posting the highest reading at 59% and North Dakota the lowest at 5.5%. Rounding out the five states with the highest percentage of underwater mortgages are Florida (43%), Arizona (40%), Georgia (36%), and Michigan (33%). All these numbers are lower than they were in the first quarter of the year.
In addition to North Dakota, the other four states with the lowest percentage of underwater mortgages are Alaska, Montana, New York, and Oklahoma. CoreLogic noted that the underwater percentage for homes valued at less than $200,000 is 32%, nearly double the 17% of underwater properties valued at more than $200,000.
Despite the improvement, CoreLogic notes that nearly 10% of underwater mortgages have negative equity totaling 125% or more of a home’s value . It will be a long time before these million or so homeowners see daylight again.
One bit of good news for 1.8 million 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.