10 States Suffering the Most from Underwater Mortgages

Alicia Wagner Calzada/Getty Images News
Alicia Wagner Calzada/Getty Images News

Years of rising home prices have been a life preserver to homeowners struggling with underwater mortgages. Millions of Americans no longer owe more on a home than it is worth, allowing them to more easily sell their homes or feel better about their finances. However, millions of homeowners across the nation still find themselves upside down on their mortgages or barely above water.

759,000 residential properties regained equity during the second quarter of 2015, compared to the prior quarter, according to a recent report from CoreLogic. An additional 800,000 properties will regain equity if home prices rise another 5%, which is about the annual pace expected over the next year. Overall, 45.9 million mortgaged residential properties in America have equity.

Much like anything else related to our sluggish economy, the good news comes with caveats. CoreLogic finds approximately 4.4 million, or 8.7% of all residential properties with a mortgage, are still underwater. In fact, the national aggregate value of negative equity totaled $309.5 billion in the second quarter. Furthermore, 9 million, or 17.8%, of properties with a mortgage have equity, but are considered under-equitied, with less than 20% equity.

A homeowner technically reaches positive equity when the market value of a house exceeds the outstanding loan balance by any amount, but the associated costs of listing a house and moving prevents many Americans who are barely above water on their mortgages from selling. The amount of underwater homeowners also varies significantly across the country.

Let’s take a look at the 10 worst states for underwater mortgages.

10. Georgia

Negative equity rate: 10%

9. New Jersey

Negative equity rate: 11.5%

8. Michigan

Negative equity rate: 12.1%

7. Ohio

Negative equity rate: 12.4%

6. Massachusetts

Negative equity rate: 12.7%

5. Illinois

Negative equity rate: 13.1%

4. Rhode Island

Negative equity rate: 13.8%

3. Arizona

Negative equity rate: 15.4%

2. Florida

Negative equity rate: 18.5%

1. Nevada

Negative equity rate: 20.6%


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