Overall, 10.9 million homes with mortgages - equal to 22.7 percent - have negative equity. While this figure is down quarter-over-quarter from 11.1 million, it still is high compared to previous standards. Furthermore, 2.4 million borrowers have no more than 5 percent equity on their home. Combined with those that have negative equity, 27.7 percent of all the nation's homes are experiencing this trouble, down from 27.9 percent during 2010's last quarter.
Nevada led the country in underwater mortgages, as 63 percent of all residential mortgages had negative equity. Arizona, Florida, Michigan and California followed, ranging between 50 percent and 31 percent. Overall, the negative equity share in the top five states sat at 39 percent, moving down a single percentage point from Q4 2010.
Las Vegas led all cities in underwater mortgage shares at 66 percent, followed by Stockton, California, and Phoenix, at 56 percent and 55 percent, respectively.
"The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks," said Mark Fleming, chief economist with CoreLogic. "Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity."
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