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Rising home prices drove down the number of U.S. homeowners struggling with underwater mortgages in the second quarter, leaving 14.5 percent of residential properties with a mortgage in negative equity, a report from CoreLogic showed on Tuesday. The rate was down from 19.7 percent in the first quarter, 22.3 percent a year ago and 26 percent in the fourth quarter of 2009, which was the most since CoreLogic began keeping statistics earlier that year.

Negative equity, another term for underwater mortgage, refers to properties whose value is less than what is owed on the mortgage. Negative equity rates spiked in the aftermath of the housing crisis, which began in earnest five years ago and set off a multiyear free-fall in prices. But recovery in the sector over the past year has helped improve some homeowners' standings. There were 7.1 million underwater homes in the second quarter compared with a downwardly revised 9.6 million in the first three months of 2013, CoreLogic (CLGX) said.

According to the S&P/Case Shiller composite index of 20 metropolitan areas, prices were up 12.1 percent in the 12 months to June. "Price appreciation obviously had a positive impact on home equity over the first half of 2013, especially in the second quarter," CoreLogic Chief Executive Anand Nallathambi said in a statement.

About 3.5 million homeowners regained positive equity in the first half of the year, the report said.
Nevada had the highest percentage of properties in negative equity in the second quarter at 36.4 percent. Rounding out the top five were Florida, Arizona, Michigan and Georgia. These five states combined accounted for 34.9 percent of negative equity in the United States.

The housing market, however, is far from fully healed. In addition to the 7.1 million homes with underwater mortgages, another 1.7 million were considered to be in near-negative equity in the second quarter, a description for properties with less than 5 percent equity. Even a modest fall in prices could put those mortgages underwater, and economists expect a recent rise in mortgage rates to slow the pace of price gains in the months ahead.

Mark Fleming, CoreLogic's chief economist, said that a slowing in price gains could slow the rate at which homeowners return to positive equity.

See more on underwater mortgages:

'Jumbo' Mortgage Rates Fall Below Traditional Ones

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We liberals love the spin even though it makes us very dizzy.

September 11 2013 at 4:23 PM Report abuse rate up rate down Reply

What we will soon see is Obama will say because the housing rebound is so great that normal folk can't buy a house and the government has to force banks to make loans to people that can't afford a house. Just like he did as a community service lawyer in Chicago in the '90's which created a lot of the problems we have been trying to get over for the last 6 years.

September 10 2013 at 11:34 PM Report abuse -2 rate up rate down Reply
1 reply to Craigermt's comment

We liberals are such fools, we believe everything Obama says.

September 11 2013 at 4:21 PM Report abuse rate up rate down Reply

Poor republicans. They HATE this news. LOL

September 10 2013 at 11:32 PM Report abuse +2 rate up rate down Reply
1 reply to Frankie's comment

They would probably like to get the truth. They won't get it from us Dems.

September 11 2013 at 4:22 PM Report abuse +1 rate up rate down Reply

Way to go President Obama, still cleaning up the mess left by bush jr. You are doing a great job.

September 10 2013 at 11:00 PM Report abuse +3 rate up rate down Reply
3 replies to toosmart4u's comment

Sounds like another train wreck to me what does Beohner think? A disaster, train wreck a reason to shut down gov't or maybe try to overturn Obamacare.

September 10 2013 at 7:01 PM Report abuse -2 rate up rate down Reply
1 reply to calderasf's comment

I hear that lib train coming. It's rollin round the bend. Ain't seen so much stupid since I don't know when...............S C R E E C H.........CRASH.

September 10 2013 at 9:07 PM Report abuse -4 rate up rate down Reply
3 replies to betty_brock's comment

Homes are still overpriced and that shows because no one is buying except investment companies trying to flip them. Homes have ben overpriced since the early 80s.

September 10 2013 at 5:55 PM Report abuse +1 rate up rate down Reply
2 replies to SPQR's comment

Not true, The housing affordability index was at an all time high 1 year ago, Still very high. We bought 27 years ago for $150K at 9.5%. You could buy last year for $160K at 3.5%. The bank payment is much less now than 27 years ago and does not consider 27 years of inflation. Most people are making 2-3X as much as 27 years ago and now have a lower payment today. Super low rates and low prices normally do not line up together. And those that kept thinking prices and or rates would just keep going lower, were kidding themselves. Were prices to go to zero and rates to zero? A year from now 100% chance rates will be more, 90% chance prices will be higher too (but it is a local commodity).

September 10 2013 at 6:32 PM Report abuse +1 rate up rate down Reply

So why are so many real people buying homes?

September 10 2013 at 7:02 PM Report abuse rate up rate down Reply

Keep in mind that part of the reason prices have gone up a little bit in some areas is that for a long time interest rates were historically low, and, the "7 year" cycle of people moving was interrupted due to the fact that seven years ago the market was at it's height, and many still cannot sell for what they owe, which contributed to a shortage of inventory of homes for sale. We still have a long way to go before fewer homes are underwater.

September 10 2013 at 5:32 PM Report abuse -2 rate up rate down Reply

I just don't get it when people walk away from their homes that are underwater. Your home is not a get rich quick scheme, it is a long term investment. Be patient, prices will go back up. It amazes me that as soon as the same people drive a $50,000 car off the lot they are "underwater", but yet they continue to drive and pay for it. I have always told the kids, if you get into financial difficulty, pay your mortgage or rent, and your utilities. You will always need a place to live more than you need the newest car, the latest cell phone and the most tv channels.

September 10 2013 at 3:40 PM Report abuse +5 rate up rate down Reply
5 replies to Freddie's comment