About 719,000 homes reached positive equity in the third quarter, putting the total number of mortgaged homes with equity at 42.6 million according to analytics firm CoreLogic. That leaves 13% of all residential properties – about 6.4 million – underwater. That number is down from about 7.2 million in the second quarter.
“Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013,” said Mark Fleming, chief economist for CoreLogic. “Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion. Negative equity will decline even further in the coming quarters as the housing market continues to improve.”
The aggregate value of negative equity nationwide was $397bn at the end of Q3, down $33.7bn from Q2’s figure of $430bn. Of the 42.6 million U.S. residential properties with positive equity, 10 million have less than 20% equity, according to CoreLogic. Borrowers with less than 20% equity may have difficulty getting new financing for their homes. More than 1.5 million homes were still at less than 5% equity, and would be considered at risk if home prices fell.
Nevada had the highest percentage of underwater homes at 32.2%, followed by Florida (28.8%), Arizona (22.5%), Ohio (18%) and Georgia (17.8%). Combined, those five states accounted for 36.4% of all underwater residential properties in the country, according to CoreLogic.
Of the 25 largest metropolitan areas, Orlando-Kissimmee-Sanford, Fla., had the highest percentage of underwater homes at 32.3%, followed by Tamp-St. Petersburg-Clearwater at 30.1%.
Almost 6.4 million American homes are still underwater, according to data released Tuesday.