Nearly 2 million homeowners no longer 'seriously' underwater

home value borrowers

Surging home prices have helped nearly two million homeowners get back above water on their mortgages over the past year.

During the first quarter, 9.1 million, or 17%, of homeowners were seriously underwater on their home, meaning their debt exceeded the home's value by 25% or more, according to RealtyTrac. That's down from 10.9 million, or 26%, of all properties a year earlier.

These states have the highest levels of underwater homeowners
State Number of seriously underwater mortgages % of all mortgages
Nevada 261,272 34%
Florida 1,717,637 321%
Illinois 747,473 30%
Michigan 410,362 29%
Ohio 584,854 27%
Rhode Island 31,302 26%
Missouri 192,256 22%
Connecticut 93,519 21%
Arizona 252,232 20%
Maryland 291,225 20%
Source: RealtyTrac
Seriously underwater mortgages are loans where debt balances exceed home values by 25% or more.

States with the highest percentage of seriously underwater homes included Nevada, Florida and Illinois.

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RealtyTrac also found that fewer properties in foreclosure are underwater.

"Because of rising home prices, many of the homeowners in the foreclosure process -- more than a third -- actually have positive equity. That will enable some of them to avoid foreclosure," said Daren Blomquist, a vice president for RealtyTrac.

These homeowners could leverage the home's value to either refinance or sell their home. "But many distressed homeowners with equity may not realize they have it and in some cases have vacated the property already, assuming that their foreclosure is inevitable," he said.

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Metro areas where more than half of the foreclosures actually have positive equity include Denver, Boston, Minneapolis, Houston and Washington, D.C.

RealtyTrac also reported that the number of "equity-rich" homeowners, those with 50% or more equity in their home, grew to 9.9 million in the first quarter. That represents 19% of all mortgaged homes.

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These equity-rich homeowners could help further lift the housing market, said Blomquist. They could trade up for bigger and more expensive homes and put their old homes up for sale -- opening up much needed housing for first-time buyers and those on tighter budgets.

Metro areas with the most equity-rich homes included San Jose, Calif., Honolulu, San Francisco, Poughkeepsie, N.Y. and Los Angeles, RealtyTrac reported.

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