U.S. homes with negative equity ticked down in third quarter

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The number of homeowners who owe more on their properties than what those homes are worth has declined steadily for most of 2010, according to statistics released Monday.

But the reason for the drop in these properties with negative equity is due more to troubled borrowers losing their homes to foreclosure than an increases in prices.

About 10.8 million, or 22.5%, of all residential properties with mortgages were in negative equity positions at the end of the third quarter, according to the Santa Ana research firm CoreLogic. That is down from 11 million, or 23%, in the second quarter.

The number of underwater borrowers has declined by more than 500,000 borrowers through the third quarter of 2010, according to CoreLogic.

‘Negative equity is a primary factor holding back the housing market and broader economy,” CoreLogic chief economist Mark Fleming said. “The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement.”

About 2.4 million borrowers had very little equity, less than 5%, at the end of the third quarter. Underwater and near-underwater homes accounted for 27.5% of all U.S. homes with a mortgage.
In the Los Angeles metro area, about 378,200, or 24.5%, of homes with a mortgage were underwater in the third quarter and another roughly 61,400, or 4%, of were in near negative equity.

The states with the most underwater homes at the end of the third quarter were Nevada with 67%, Arizona 49%, Florida 46%, Michigan 38% and California 32%.

-- Alejandro Lazo