Nevada, Florida, and Illinois were the top three states in negative equity for residential properties in the third quarter of 2014, marking the fourth consecutive quarter those three states led the nation in that category, according to RealtyTrac's Home Equity & Underwater Report for Q3 2014 released Thursday.
Nevada topped all states with 31 percent of all residential properties seriously underwater, or with negative equity, meaning the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value. Florida, which also has the nation's highest foreclosure rate, came in second among states with a negative equity rate of 28 percent. Illinois was third with 26 percent. Michigan (25 percent) and Rhode Island (22 percent) rounded out the top 5, according to RealtyTrac.
The list of top metropolitan areas with a population of 500,000 or more with the highest seriously underwater rate closely followed the corresponding list of states. Las Vegas, Nevada, and Lakeland, Florida, tied for the top spot among metropolitan areas with the highest negative equity rate with 34 percent each, followed by three Florida metro areas: Palm-Bay-Melbourne-Titusville (31 percent), Orlando (30 percent), and Jacksonville (30 percent). Detroit was sixth on the list at 20 percent, according to RealtyTrac.
Colorado topped the list of states with the highest percentage of residential properties that were in the foreclosure process despite having positive equity, with 73 percent. Montana was second with 71 percent, followed by Oklahoma at 69 percent, according to RealtyTrac. The metro areas that led the nation in this category were Denver (79 percent), Pittsburgh (78 percent), Honolulu (77 percent), Baton Rouge (74 percent), and San Jose (73 percent).
The nation's major metropolitan areas with the highest percentage of equity-rich residential properties, meaning the properties had an equity of at least 50 percent, were San Jose (45 percent), San Francisco (41 percent), Honolulu (36 percent), Los Angeles (32 percent), and New York (31 percent), according to RealtyTrac.
Nationwide, 8.1 million residential properties in the U.S. with a mortgage (about 15 percent) were seriously underwater in Q3, which is the lowest level since RealtyTrac began tracking the data in Q1 2012.