GRAPH LOGO-15 CoreLogic released its third quarter 2013 analysis, and it finds that about 791,000 more residential U.S. properties returned to a state of positive equity and are no longer underwater.

Locally, the number of underwater homeowners in the Naples and Fort Myers metropolitan areas continues to drop. The report showed that 20.5 percent, or 17,839 residential properties with a mortgage, were in negative equity in the Naples metro area in the third quarter, down from 21.5 percent, or 18,866 properties, in the second quarter. In the Fort Myers area, 25.3 percent, or 38,976 homes, were underwater in the third quarter, compared to 26.6 percent, or 41,855 properties in the prior quarter. During the height of the housing downturn in 2009, almost half of the homes in Southwest Florida financed with mortgages were worth less than the amount owed to a lender.

In a state-by-state comparison, Florida ranked second in percentage of underwater mortgages with 28.8 percent. Nevada had the highest percentage of mortgaged properties in negative equity at 32.2 percent, followed by Arizona (22.5 percent), Ohio (18.0 percent) and Georgia (17.8 percent). The top five states accounted for 36.4 percent of negative equity in the U.S.

Florida also ranked high in a city-by-city breakdown of underwater mortgages. Of the largest 25 metropolitan areas, Orlando-Kissimmee-Sanford, Fla., had the highest percentage of mortgaged properties in negative equity at 32.3 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (30.1 percent). The last three metro areas in the top five include Phoenix-Mesa-Scottsdale, Ariz. (23.2 percent), Riverside-San Bernardino-Ontario, Calif. (20.8 percent) and Chicago-Naperville-Arlington Heights, Ill. (20.5 percent).

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.

Of 42.6 million residential U.S. properties with positive equity, 10 million have less than 20 percent. Borrowers with less than 20 percent, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. Under-equitied mortgages accounted for 20.4 percent of all residential properties with a mortgage nationwide in the third quarter of 2013, with more than 1.5 million residential properties at less than 5 percent equity, referred to as near-negative equity. Properties with near-negative equity are considered at risk should home prices fall.

“Negative equity will decline even further in the coming quarters as the housing market continues to improve,” says Mark Fleming, chief economist for CoreLogic.