According to RealtyTrac's Year-End 2015 U.S. Home Equity and Underwater Report, 6.4 million U.S. properties were identified as "seriously underwater," meaning the combined loan amount secured on the property was at least 25% higher than the property's estimated market value. This number represented 11.5% of all properties with a mortgage.
However, seriously underwater properties at year-end 2015 were down from 6.9 million (representing 12.7% of all properties with a mortgage) at the end of the third quarter of 2015, and down from 7.1 million (also representing 12.7% of all properties with a mortgage) at the end of 2014. In addition, the number of seriously underwater properties at the end of 2015 was half of the 12.8 million (representing 28.6% of all properties with a mortgage) reported for the second quarter of 2012, when the number of seriously underwater properties peaked.
"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," Daren Blomquist, vice president of RealtyTrac, said.
Florida and Ohio were two states with cities that saw high levels of seriously underwater properties. Specifically, among metropolitan statistical areas with a population of at least 500,000, those with the highest share 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%).
"At the other end of the spectrum, the growing number of equity-rich properties reflects a moribund move-up market and restrained leverage of home equity by U.S. homeowners," Blomquist said.
At the end of 2015, there were 12.6 million U.S. properties that were equity-rich (with at least 50% equity), representing 22.5% of all properties with a mortgage. The number of equity-rich properties at the end of 2015 was up 2.1 million (representing 19.2% of all properties with a mortgage) from the 10.5 million reported at the end of the third quarter of 2015, and up 1.4 million (representing 20.3% of all properties with a mortgage) from the 11.2 million reported at the end of 2014.
California was one state that shined in this area. Among metropolitan statistical areas with a population of at least 500,000, those with the highest share of equity-rich properties as of the end of 2015 were San Jose, Calif. (53.7%), San Francisco (47.6%), Honolulu (36.7%), Los Angeles (35.8%) and Pittsburgh (35.0%).
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