According to the report, 6.9 million U.S. residential properties were seriously underwater at the end of the third quarter – a decline of more than half a million from Q2 and more than 1.2 million less than a year ago. The third quarter’s numbers were also at the lowest level since RealtyTrac began tracking underwater data in 2012.
In the second quarter, there were 77,443,580 million seriously underwater homes in the U.S., representing 13.3% of all homes with a mortgage.
The third quarter’s decline also saw the share of distressed properties that were underwater hit its lowest level since 2012. At the end of Q3, 33.4% of distressed properties were underwater, a drop of one perce3ntage point from Q2 and 5.5 percentage points on a year-over-year basis.
The decrease in underwater properties was due in large part to an uptick in sales, RealtyTrac reported.
“After a lull late last year and early this year, home sales volume and average sales prices picked up dramatically again in the second and third quarters of this year, resulting in a substantial drop in seriously underwater homeowners,” said Daren Blomquist, vice president at RealtyTrac. “On the other hand, the number and share of equity rich homeowners also dropped dramatically between the second and third quarters — continuing a trend from the previous two quarters — evidence that more homeowners in this category are leveraging their equity through a refinance, move-up sale or by completely cashing out of the housing market.”
Florida currently has the largest issue with underwater properties, with that state’s markets filling six of the top 10 slots for underwater homes.
Lakeland, Fla., topped the list with 28% of residential properties underwater, followed by Las Vegas (27.3%), Cleveland, Ohio (27.2%), Deltona-Daytona Beach, Fla. (26.7%), Orlando, Fla. (25.6%), Tampa, Fla. (24.3%), Toledo, Ohio (24.1%), Chicago, Ill. (24%), Palm Bay, Fla. (24%) and Jacksonville, Fla. (23.8%).
The number of seriously underwater U.S. properties – properties on which the homeowner owes at least 25% more than the home is worth – plummeted during the third quarter, according to a report from RealtyTrac.