According to RealtyTrac's U.S. Home Equity & Underwater Report for the third quarter of 2014, 28 percent of Floridians with a mortgage owe more than the current value of their property. Only Nevada, at 31 percent, ranks higher.
Other states with a high number of underwater homeowners include Illinois (26 percent), Michigan (25 percent) and Rhode Island (22 percent).
While Las Vegas led the nation in cities (population of 500,000 or more) with "seriously underwater" homeowners at 34 percent, four Florida cities made the top five: Lakeland (also 34 percent), Palm Bay-Melbourne-Titusville (31 percent), Orlando (30 percent) and Jacksonville (30 percent). RealtyTrac considers a home "seriously underwater: if the mortgage(s) is at least 25 percent higher than the property's estimated market value.
Nationally, RealtyTrac found 8.1 million U.S. residential properties seriously underwater, or 15 percent of all properties with a mortgage.
However, the third quarter numbers were down to the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012. In the previous quarter, 17 percent of all properties with a mortgage were seriously underwater; in the third quarter of 2013, it was 23 percent.
On the flip side, the number of equity-rich properties – those with at least 50 percent equity – grew to 20 percent from 19 percent in the second quarter. In addition, 10 percent of mortgage homes had just emerged from negative equity, and another 10 percent are about to do so.
While things appear to be getting better, progress will begin to slow because home values aren't rising as quickly as they once were, according to Daren Blomquist, vice president at RealtyTrac. "Slower price appreciation means the 8 million homeowners seriously underwater could still have a long road back to positive equity," he says.
According to the report, the highest percentage of seriously underwater homeowners bought or refinanced during the housing bubble, from 2004 - 2008. On the other end, the highest percentages of equity rich homeowners were those who bought or refinanced between 1994 and 1998.
Underwater status also hinged on property value. The highest percentages of seriously underwater homeowners were found at the low end: homes worth under $200,000. Conversely, homes worth over $500,000 had the lowest percentage of seriously underwater loans and the highest percentage of equity rich properties.
© 2014 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.