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Fewer homeowners underwater

By Judy Martel · Bankrate.com
Thursday, January 9, 2014
Posted: 3 pm ET

Nineteen percent of homes with a mortgage were "deeply" underwater in December, meaning they were worth at least 25 percent less than the amount of any outstanding loans on the property. Although that represents 9.3 million residential properties, the number is down from 10.7 million in September, according to RealtyTrac.

The number of homes under threat of foreclosure is dropping in California, where homeowners are gaining equity.

The number of homes under threat of foreclosure is dropping in California, where homeowners are gaining equity.

The number of distressed homeowners has been steadily falling since a peak in May 2012, when 29 percent, or 12.8 million homes, were deeply underwater.

An injection of equity

Daren Blomquist, vice president at RealtyTrac, said in a news release that while falling home prices put millions of homeowners at risk of losing their homes to foreclosure during the housing crisis, the outlook is more positive as prices rise. "The percentage of equity-rich homeowners is nearing a tipping point that should result in a larger inventory of homes listed for sale and give the overall economy a nice shot in the arm in 2014," he added.

But millions of homeowners still live under the threat of foreclosure because they are so deep in the hole and any triggering event, such as job loss, could push them to the financial limit, he said.

Sunny, sandy and underwater

Nevada topped the list of states with the highest percentage of homeowners who are deeply underwater, at 38 percent. It was followed by Florida, 34 percent; Illinois, 32 percent; Michigan, 31 percent; Missouri, 28 percent, and Ohio, 28 percent – all states that were hit hard by the housing crisis and recession.

Places where owners have the most equity

States with the highest percentage of homeowners who had at least 50 percent equity in their homes in December included Hawaii, 36 percent; New York, 33 percent; and California, 26 percent. Montana, Maine and Washington, D.C., all came in at 24 percent.

Keep up with your wealth and mortgages and follow me on Twitter @JudyMartel.

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22 Comments
k harris
January 21, 2014 at 4:29 pm

I purchased my home in 2010 fha.. I am under water unable to refinance for these two reasons. it's driving me crazy. checked everywhere and still getting the same answer. Sorry we can't help you. is there any help for me maybe someone is overlooking?

Phil Gallagher
January 12, 2014 at 1:28 pm

If your bank won't refi, go to another bank. I did that myself, when I did a refi

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