CoreLogic released negative equity data showing that 11.1 million, or 22.8 percent, of all U.S. residential properties with a mortgage had negative equity at the end of the fourth quarter of 2011. In Florida, that bumps up to 44.2 percent, though two other states fared worse – Nevada had 61 percent in negative equity and Arizona had 48 percent.
The number is up from 10.7 million properties, 22.1 percent, in the third quarter of 2011.
An additional 2.5 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter. In Florida, 179,460 mortgage holders had near-negative equity, or 4.1 percent of homeowners with a mortgage.
Together, negative equity and near-negative equity mortgages accounted for 27.8 percent of all U.S. residential properties with a mortgage nationwide in the fourth quarter, up from 27.1 in the previous quarter. Nationally, the total mortgage debt outstanding on properties in negative equity increased from $2.7 trillion in the third quarter to $2.8 trillion.
Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
“Due to the seasonal declines in home prices and slowing foreclosure pipeline, which is depressing home prices, the negative equity share rose in late 2011,” says Mark Fleming, chief economist with CoreLogic. “The negative equity share is back to the same level as Q3 2009. … The high level of negative equity and the inability to pay is the ‘double trigger’ of default, and the reason we have such a significant foreclosure pipeline.”
Michigan (35 percent) and Georgia (33 percent) rounded out the top five states for negative home equity. It’s the second consecutive quarter to see Georgia in the top five, surpassing California (30 percent), which previously had been in the top five since tracking began in 2009.