About 6.4 million U.S. properties, or about 11.5% of all properties with a mortgage, were seriously underwater as of the end of December 2015 – down from 6.9 million properties, or 12.7% of all properties with a mortgage, as of the end of the third quarter of 2015 and down from 7.1 million properties, also about 12.7% of all properties with a mortgage, at the end of 2014, according to estimates recently released by RealtyTrac.
ReatyTrac defines “seriously underwater” as being when the combined loan amount secured by the property is at least 25% higher than the property’s estimated market value.
Since hitting a peak in the second quarter of 2012, when there were about 12.8 million seriously underwater properties, the number had fallen to nearly half of that by the end of 2015.
“Over the past three and a half years, the number of seriously underwater properties has been cut in half, but we continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory,” says Daren Blomquist, vice president of RealtyTrac, in a statement. “At the other end of the spectrum, the growing number of equity rich properties reflects a moribund move-up market and restrained leveraging of home equity by U.S. homeowners.”
As of the end of 2015, about 12.6 million U.S. properties were “equity rich” (at least 50% equity), representing 22.5% of all properties with a mortgage. That’s up 2.1 million from the 10.5 million, representing 19.2% of all properties with a mortgage at the end of the third quarter of 2015 and up 1.4 million from the 11.2 million representing 20.3% of all properties with a mortgage at the end of 2014.
Major cities with the highest shares of seriously underwater properties as of the end of 2015 were Las Vegas (27.7%); Lakeland, Fla. (24.4%); Cleveland (24.2%); Akron, Ohio (22.5%); and Orlando, Fla. (22.2%).
Cities with the lowest shares of seriously underwater properties as of the end of 2015 were San Jose, Calif. (1.8%); San Francisco (3.8%); Austin, Texas (3.9%); Portland (4.2%); and Boston (4.2%).
To check out the full 2015 Home Equity Report report, click here.