Number of ‘underwater’ homes declines slightly

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The number of underwater homeowners in the U.S. declined slightly during the first three months of the year.

The decline in the number of borrowers owing more on their mortgages than those properties are worth occurred despite falling home prices, which have the effect of plunging borrowers underwater.

Those price declines are being offset by a pickup in foreclosure sales, which take underwater homes off the market, said Sam Khater, an economist with research firm CoreLogic of Santa Ana, which released the data Tuesday.

“We are treading water,” Khater said.

The data showed that about 10.9 million homes with a mortgage, or 22.7% of such properties, were in an upside-down position at the end of the first quarter. That was a slight decline from 11.1 million, or 23.1%, in the fourth quarter.

Nevada had the most homes underwater, with 63% of all mortgaged properties upside-down, followed by Arizona, 50%; Florida, 46%; Michigan, 36%; and California, 31%.

The Los Angeles metro area had 365,128 underwater homes, or 23.8% of all residential properties with a mortgage. That compared to 378,230 underwater homes at the end of the fourth quarter, or 24.6% percent of residential properties with a mortgage.

Las Vegas led the nation with a 66% negative equity share, followed by Stockton, 56%; Phoenix, 55%; Modesto, 55%; and Reno, Nev., 54%. A report by the Los Angeles Times last week found that in some parts of the Las Vegas metro area more than 80% of homes were underwater, severely limiting mobility and economic opportunity in the region.

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-- Alejandro Lazo

Twitter: @AlejandroLazo