First, the good news: Rapidly rising home prices last year helped millions of troubled homeowners regain equity in their properties, data released Thursday show.
Now the bad: The recovery remained lopsided, and just five states made up more than one-third of the negative equity in the U.S. in the fourth quarter.
Rebounding from crash lows, residential prices zoomed up in 2013, and four million homes regained positive equity, according to a report from CoreLogic, an Irvine, Calif.-based analysis firm. Across the U.S., 13.3% of residential properties with a mortgage were in negative equity in the fourth quarter — meaning that owners owed more on a mortgage than their home was worth — down from 21.6% a year earlier.
“The plight of the underwater borrower has improved dramatically since negative equity peaked in December 2009 when more than 12 million mortgaged homeowners were underwater,” said Mark Fleming, chief economist, in a statement.
But the market hasn’t completely healed: almost 6.5 million homes were in negative equity in the fourth quarter, according to CoreLogic. And certain states are worse off than others. Properties in Nevada, Florida, Arizona, Ohio, and Illinois accounted for 36.9% of total national negative equity at the end of 2013.
Still, even beleaguered states have seen improvement. In Nevada, for example, 30.4% of mortgaged properties were in negative equity in the fourth quarter, down from 52% a year earlier. Similarly, Florida saw its share fall to 28.1% from 40.5%.