The number of U.S. homeowners who owe more on their homes than they are worth declined to about 6.4 million in the third quarter of 2013, an 11% drop from the previous quarter, a report released Tuesday found.
Property data firm CoreLogic said the continued housing recovery is largely the reason the number of underwater mortgages has declined and why more homeowners have regained positive equity.
Since the third quarter of 2012, the number of underwater mortgages has declined from 10.6 million.
“Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013," said Mark Fleming, CoreLogic's chief economist. "Negative equity will decline even further in the coming quarters as the housing market continues to improve.”
CoreLogic's data also showed that more than 20% of mortgaged properties have positive equity but are considered "under-equitied," meaning those borrowers have less than 20% home equity.
Nationally, the total value of negative-equity mortgages decreased $33.7 billion to $397 billion, CoreLogic said.
In California, the recovery has been uneven. The Riverside-San Bernardino-Ontario area has the largest number of underwater mortgages — 170,631 — which represents nearly 21% of mortgages in the area. Nationally, that rate is 13%.
Other inland metro areas in the state with stubbornly high rates of underwater mortgages include Stockton, Sacramento and Visalia.
The Bay Area, unsurprisingly, has a low rate of underwater mortgages. The San Francisco metro area has only 6,677 mortgages with negative equity — 2.5% of all mortgaged properties there.