New data released by CoreLogic shows that a large number of homeowners remain “underwater”, a situation where they owe more on their mortgage than their homes’ value, as a result of continuing property price declines.
CoreLogic said that around 10.9 million residential properties, which amounts to 22.5% of all mortgaged homes in the US, were underwater at the end of June, a figure which was slightly down on 2010’s second quarter total of 22.7%. Even worse, another 2.4 million had equity amounting to less than 5%, something that CoreLogic labels “near-negative equity”.
Nevada leads the way with the most residential properties with negative equity, with more than 60% of its mortgaged properties now considered to be underwater. Things are not much better in Arizona, with 49% underwater, and Florida, where 45% of mortgaged properties are in the red. Michigan and California homeowners were also struggling, with 36% and 30% of mortgaged homes there currently underwater.
The data also showed that since housing sales peaked back in 2005, figures for non-distressed sales had dropped to 61% in areas with low negative equity, while in areas of high negative equity sales had fallen by a huge 83%.
CoreLogic made the following comments on the data:
“The typical seasonal changes in sales volume in high negative equity ZIP codes is very muted, which indicates that non-distressed sales are being heavily impacted by the high levels of negative equity in their neighborhood, even if sellers have equity.”
CoreLogic’s Mark Fleming added that sales and refinancing were being held back by high negative equities, and that was one of the biggest impediments to a recovery. Although some of the worst markets in the US have shown signs of improvement, the overall level of mortgage debt relative to property prices remains high.