Negative Equity Falls as Foreclosures Rise; Nevada, Arizona Worst

Negative equity is concentrated in five states: Nevada, at 67%; Arizona, 49%; Florida, 46%; Michigan, 38%; and California, 32%. The largest drops in negative equity were, according to CoreLogic, in the hardest hit states: Alaska, Nevada, Arizona, California, and Florida. Idaho and Alabama saw their proportion of negative equity rise; they are the top two states in which home prices are falling.

States with the highest amount of positive equity are New York, Hawaii, Massachusetts, Rhode Island, and Connecticut. Some states are “barbells”—that is, they have large numbers of homeowners with positive equity and also large numbers with negative equity. Among these are Rhode Island, the most extreme; and to a lesser extent are Massachusetts, New Jersey, Washington, D.C., and California.

Mark Fleming, chief economist with CoreLogic, said in a statement, “Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”