The number of homeowners underwater on their mortgage continues to shrink as the amount of tappable home equity grows, Black Knight Financial Services found in its latest Mortgage Monitor report.
The number of homeowners in negative equity now stands at 2.2 million, the fewest since early 2007, which equates to a negative equity rate of just 4.4%. Over the course of 2016 alone, 1 million homes returned to positive equity, Black Knight reported Monday.
While negative equity represented a nationwide problem during the recession, today it is now more of a localized issue, according to Black Knight Data and Analytics Executive Vice President Ben Graboske.
"By and large, the majority of states have negative equity rates below the national average of 4.4%," Graboske said. "There are, though, some pockets where homeowners continue to struggle. Three states in particular stand out: Nevada, Missouri and New Jersey, all of which have negative equity rates more than twice the national average."
Atlantic City, N.J., has the highest negative equity rate in the country, at 23%, followed by St. Louis at 20%.
At the same time, there are now more than 39 million homeowners with tappable equity, which indicates that their current combined loan-to-value ratio is less than 80%. Altogether, there is now $4.6 trillion in total tappable equity, or an average of $118,000 per borrower.