Slight decline for negative equity in second quarter

CoreLogic recently released the findings from its second quarter negative equity report, which found 22.5 percent of all residential properties with mortgages were in negative equity at the end of the three-month period, while 2.4 million borrowers had near-negative equity. Together the negative and near-negative equity mortgages totaled 27.5 percent of all residential mortgage properties in the country.

While the report found negative equity numbers were slightly lower in the second quarter compared to the first quarter, the data showed nearly 75 percent of homeowners in negative equity were also paying above-market interest rates on their home loans. Negative equity did improve in the five states that had the highest percentage of underwater mortgages including Nevada, Arizona and Florida.

The decrease in negative equity, however, is most likely to due to an increase in foreclosures, according to Mark Flemming, chief economist at CoreLogic. Flemming said the high level of mortgage debt is holding back refinancing and home sales, which are key in a housing recovery.

ClearCapital recently identified housing markets that are expected to show modest gains in home price and sales for the remainder of 2011, including Washington, D.C., Long Island, New York, and Orlando, Florida. ClearCapital predicts the volatility in the housing market caused by price swings and temporary boosts from tax credits will level off, but anticipates another 2.4 percent drop in home prices for the remainder of the year. 

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