Across the universe of underwater homesrnthe national aggregate value of negative equity was put at $348.8 billion atrnthe end of the fourth quarter, an increase of approximately $7 billion fromrn$341.8 billion in Quarter 3.  On arnyear-over- year basis, however, the value of negative equity declined overallrnfrom $403 billion in Q4 2013, representing a decrease of 13.4 percent in 12rnmonths.</p

Of those homes in positive territory anrnestimated 10 million, or 20 percent, have less than 20-percent equity (referredrnto as “under-equitied”) and 1.4 million of those have less thanrn5-percent equity (referred to as near-negative equity). Borrowers who arern”under-equitied” may have a more difficult time refinancing theirrnexisting homes or obtaining new financing to sell and buy another home due tornunderwriting constraints. Borrowers with near-negative equity are at risk of fallingrninto negative equity if home prices decrease.  In contrast, if home prices rose by as littlernas 5 percent, an additional 1 million home owners now in negative equity wouldrnregain equity. </p

“Negative equity continued to be arnserious issue for the housing market and the U.S. economy at the end of 2014rnwith 5.4 million homeowners still ‘underwater’,” said Anand Nallathambi, presidentrnand CEO of CoreLogic. “We expect the situation to improve over the coursernof 2015. We project that the CoreLogic Home Price Index will rise 5 percent inrn2015, which will lift about 1 million homeowners out of negative equity.”</p

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The highestrnpercentage of negative equity continues to be in Nevada at 24.2 percent of allrnmortgaged properties followed by Floridarn(23.2 percent); Arizona (18.7 percent); Illinois (16.2 percent) and RhodernIsland (15.8 percent). These top five states combined account for 31.7 percentrnof negative equity in the United States. rnTexas had the highest share of homes with equity at 97.2 percent closelyrnfollowed by Montana at 97.0 percent.  Otherrnstates with high levels were Alaska (97.2 percent), Hawaii (96.3 percent) and North Dakotarn(96.2 percent).</p

The bulk of home equity among mortgagedrnproperties is concentrated at the high end of the housing market. For example,rn94 percent of homes valued at greater than $200,000 have equity compared withrn84 percent of homes valued at less than $200,000.</p

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Approximately 3.2 million underwaterrnborrowers hold first liens without home equity loans.  They account for $185 billion of the $349rnbillion in negative equity.  The averagernmortgage balance for this group of borrowers is $228,000 and their averagernunderwater amount is $57,000.  Approximatelyrn2.1 million underwater borrowers hold both first and second liens accountingrnfor $164 billion, or 47 percent of the total. rnThe average mortgage balance for this group of borrowers is $295,000 andrnthey are underwater an average of $77,000.

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