RealtyTrac LogoNationwide, 9.1 million residential properties with a mortgage (17 percent) were “seriously underwater,” meaning the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value, according to RealtyTrac’s U.S. Home Equity & Underwater Report for the second quarter of 2014.

The numbers signify a small percentage decrease (0.2 percent) in homes seriously underwater compared to the first quarter, but it’s still the lowest level since RealtyTrac began reporting negative equity in 2012. The recent peak in negative equity was the second quarter of 2012, when 12.8 million U.S. residential properties representing 29 percent of all properties with a mortgage were seriously underwater.

In Florida, RealtyTrac found that 1,681,637 properties (30 percent) were seriously underwater. An additional 738,510 homes (13 percent) were underwater but nearing equity thanks to rising home values.

The universe of equity-rich properties – those with at least 50 percent equity – held steady from the first quarter at 9.9 million in the second quarter of 2014, representing 18.8 percent of all properties with a mortgage.

In Florida, 881,896 homes (16 percent) with a mortgage were equity rich.

Another report finding: Of all homes in the foreclosure process, fewer (44 percent) had negative equity in the second quarter, a drop from the first quarter’s 45 percent and the 57 percent one year earlier. However, the share of homes with positive equity (34 percent) also declined compared to the first quarter (35 percent). The simultaneous drop can be explained, in part, by the number of homes that completed foreclosure and moved out of the foreclosure inventory.

In Florida, RealtyTrac found that 25 percent of homes in foreclosure had some equity. However, 56 percent were seriously underwater.

“Home price appreciation has slowed in the last few months in many of the markets with the most underwater homes, slowing the pace at which homeowners are recovering equity lost during the Great Recession,” says Daren Blomquist, vice president at RealtyTrac. “For instance, annual home price appreciation in California was at 16 percent in May 2014 compared to a high of 31 percent in July and August of 2013.

“In addition, many of the properties that are seriously underwater are in a deep negative equity hole that will take some time to dig out of,” Blomquist adds. “The average loan-to-value on the 9.1 million homes seriously underwater was 133 percent, and the average loan-to-value on the homes in foreclosure that are seriously underwater was 134 percent.”

Markets with the most negative equity

States with the highest percentage of residential properties seriously underwater in the second quarter were Nevada (32 percent), Florida (30 percent), Illinois (30 percent), Rhode Island (29 percent) and Michigan (27 percent).

Major metropolitan statistical areas (population 500,000 or more) with the highest percentage of residential properties seriously underwater were Lakeland, Fla. (37 percent), Las Vegas (35 percent), Cleveland (35 percent), Palm Bay-Melbourne-Titusville, Fla. (32 percent), Chicago (30 percent), Cape Coral-Fort Meyers, Fla. (30 percent), and New Haven-Milford, Conn. (30 percent).

Markets with the most resurfacing equity

Major metro areas with the highest percentage of resurfacing equity – between negative 10 percent and positive 10 percent – were Colorado Springs, Colo., (28 percent), Albuquerque N.M. (22 percent), Lancaster, Penn. (22 percent), El Paso, Texas (22 percent), Salt Lake City (22 percent) and Worcester, Mass. (22 percent).

Markets with the most equity-rich properties

Major metro areas with the highest percentage of equity rich properties – those with at least 50 percent equity – were San Francisco (37 percent), Honolulu (36 percent), Los Angeles (32 percent), New York (29 percent), Oxnard, Calif. (28 percent), and San Diego (28 percent).