More Homes Bounce Back from ‘Deeply Underwater’ Status

The number of ""deeply underwater"" properties fell by more than a million between the third and fourth quarters of 2013, housing data firm ""RealtyTrac"":http://www.realtytrac.com/ reported.

According to RealtyTrac's ""latest data"":http://www.realtytrac.com/content/foreclosure-market-report/us-home-equity-and-underwater-report-december-2013-7959, approximately 9.3 million residential properties in December had a combined loan amount at least 25 percent higher than their market value. The figure represents about 19 percent of all properties with a mortgage.

That number was down from 10.7 million deeply underwater homes (about 23 percent of all properties) in September and 10.9 million (26 percent) at the beginning of 2013. The number of deeply under properties peaked in May 2012 at approximately 12.8 million (representing 29 percent of all mortgaged homes), RealtyTrac reported.

At the other end of the spectrum, the number of ""equity-rich properties"" (those with at least 50 percent equity) grew, rising from 7.4 million to 9.1 million (representing 18 percent of all mortgaged residential properties).

""During the housing downturn we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss,"" said Daren Bloquist, VP at RealtyTrac. ""Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.""

Blomquist noted, however, that there are still millions of Americans ""who are in such a deep equity hole that it will take years for them to regain their equity.""

The states with the highest percentage of deeply underwater homes in December were mostly those with markets still struggling to regain ground lost in the crash. Nevada topped the list, with 38 percent of all mortgaged properties categorized as deeply underwater; Florida followed (34 percent), along with Illinois (32 percent), Michigan (31 percent), and Missouri (28 percent).

States with the highest percentage of equity-rich properties included Hawaii (36 percent), New York (33 percent), California (26 percent), Montana (24 percent), and Maine (24 percent).