The number of “seriously underwater” homes nationwide has hit a plateau, while the volume of “equity-rich” mortgaged properties decreased for the second straight quarter.

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Takeaways:

  • The number of “seriously underwater” homes nationwide has hit a plateau, while the volume of “equity-rich” mortgaged properties decreased for the second straight quarter.
  • At the end of 2Q 2015, 13.3 percent of all properties with a mortgage were seriously underwater, and 19.6 percent of all mortgaged properties had more than 50 percent equity.
  • Residential properties owned between seven and 11 years accounted for 38 percent of all seriously underwater homes.

The number of “seriously underwater” homes nationwide has hit a plateau, while the volume of “equity-rich” mortgaged properties decreased for the second straight quarter.

At the end of second-quarter 2015, there were more than 7.4 million U.S. residential properties that were seriously underwater — where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value.

This total represents 13.3 percent of all properties with a mortgage, according to RealtyTrac’s recently released U.S. Home Equity & Underwater Report. The total also equates to a slight increase in underwater homes when compared to the previous quarter, when there were more than 7.3 million such homes.

historical-underwater-realtytrac

During the second quarter of last year, there were approximately 9.1 million seriously underwater properties.

Markets with a population greater than 500,000 that had the highest percentage of seriously underwater properties in the second quarter of 2015 were:

  • Lakeland, Florida (28.5 percent)
  • Cleveland (28.2 percent)
  • Las Vegas (27.9 percent)
  • Akron, Ohio (27.3 percent)
  • Orlando (26.1 percent)

Other markets with a higher percentage included:

  • Tampa (24.8 percent)
  • Chicago (24.8 percent)
  • Palm Bay, Florida (24.4 percent)
  • Toledo, Ohio (24.3 percent)

RealtyTrac notes that residential properties owned between seven and 11 years accounted for 38 percent of all seriously underwater homes at the end of the second quarter.

The number of equity-rich mortgaged properties — those with at least 50 percent equity — decreased on a quarter-over-quarter basis for the second straight quarter, down to 10.9 million. This total represents 19.6 percent of all mortgaged properties.

While the quarter’s total is down from the previous two quarters, it’s also up from 9.9 million during the second quarter of 2014.

A number of markets with the highest percentage of equity-rich properties are located in California:

  • San Jose (43.8 percent)
  • San Francisco (38.3 percent)
  • Los Angeles (32 percent)
  • Oxnard (27.5 percent)
  • San Diego (26.9 percent)

Other top metros, in terms of highest percentage of equity-rich properties, include:

  • Honolulu (36.7 percent)
  • New York (30.7 percent)
  • Pittsburgh (29.4 percent)
  • Poughkeepsie, New York (28 percent)

While the overall number of equity-rich properties declined slightly quarter to quarter, the share of foreclosures with positive equity increased to 42.4 percent. In comparison, 34.1 percent of foreclosures had positive equity during the second quarter of 2014.

Major markets where the share of distressed properties with positive equity exceeded 60 percent included:

  • Denver (83.7 percent)
  • Austin (83.1 percent)
  • Honolulu (77.5 percent)
  • San Jose (77 percent)
  • Pittsburgh (75.9 percent)
  • Jackson, Mississippi (75 percent)

Email Erik Pisor.

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