The number of U.S. homes worth significantly less than their mortgages shrank again last year and is now half of the peak reached four years ago.
More than 6.4 million homes were seriously underwater at the end of 2015, representing 11.5 percent of properties with a mortgage, according to a new report from RealtyTrac. That’s down from 6.9 million houses at the end of the third quarter and 7.1 million properties the previous year.
RealtyTrac considers a home seriously underwater when the mortgage amount is 125 percent or more of the home’s market value.
The number of seriously underwater homes hit a high in the second quarter of 2012, when over 12.8 million homes, or 28.6 percent of all properties with a mortgage, held the distinction. RealtyTrac predicts that it will take more than five years of growth before the homes currently upside-down in their mortgages gain positive equity.
The company found that almost three out of five seriously underwater properties were owner-occupied. Fifty-seven percent had been owned for 10 years or less and 63 percent had a loan originated in 2008 or earlier. A third were valued $100,000 or less.
The cites with the largest share of seriously underwater homes were Las Vegas (27.7 percent); Lakeland, Florida (24.4 percent); Cleveland (24.2 percent); Akron, Ohio (22.5 percent); and Orlando, Florida (22.2 percent). Those with the lowest share were San Jose, California (1.8 percent); San Francisco (3.8 percent); Austin, Texas (3.9 percent); Portland, Oregon (4.2 percent); and Boston (4.2 percent).
Here are the rankings for states with homes that are seriously underwater, starting with the worst.