Of the 41.5 million homeowners, 10.3 million have less than 20% equity. CoreLogic said these borrowers, who are referred to as “under-equitied,” could have a hard time obtaining new financing for their properties due to underwriting constraints. Out of all residential properties with a mortgage, those who were deemed to be under-equitied accounted for 21.1% in the second quarter of 2013.
Furthermore, during this time period, 1.7 million residential properties were considered to be near negative equity by having less than 5% equity.
The majority of homeowners in positive equity are those who have “high end” properties. For example, 91% of homes valued at $200,000 or higher have equity compared with 80% of homes that are priced below this figure, CoreLogic stated.
The national aggregate value of negative equity was $428 billion at the end of the second quarter compared to $576 billion through the end of the previous quarter. The Irvine, Calif.-based analytic firm cited an improvement in home prices for this quarter-over-quarter decrease.
Overall, 7.1 million homes, or 14.5% of all residential properties with a mortgage, are still underwater—meaning the borrowers owe more on their mortgages than their homes are worth. This figure is a drop from 9.6 million homes (19.7%) from the end of 1Q13.
CoreLogic said Nevada had the highest percentage of mortgaged properties in negative equity at 36.4%, followed by Florida (31.5%), Arizona (24.7%), Michigan (22.5%) and Georgia (20.7%). These five states combined consist of 34.9% of the negative equity throughout the nation.
“In just the first half of 2013 almost three and a half million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half,” said Mark Fleming, chief economist for CoreLogic.
CoreLogic determines the amount of equity for each property by comparing the estimated current value of the home against the mortgage debt outstanding. If the MDO is greater than the estimated value, then the property is determined to be in negative equity, while if the estimated value is higher than the MDO, then the home is considered to have positive equity.
CoreLogic data includes 49 million properties with a mortgage, which accounts for more than 85% of all U.S. mortgages.