Roughly 23.1% of all residential homes encumbered with mortgages (11.1 million units) were in a negative equity position at yearend, according to new figures released by CoreLogic (CL), Santa Ana, Calif.
Compared to the third quarter, homes with negative equity rose about 3%.
Nationwide, Nevada had the highest negative equity ratio with 65% of all mortgaged homes underwater, followed by Arizona (51%), Florida (47%), Michigan (36%) and California (32%).
Negative equity occurs when a home is worth less than the mortgage debt.
"Negative equity holds millions of borrowers captive in their homes, unable to move or sell their properties," said Mark Fleming, CL chief economist. "Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish."
An additional 2.4 million borrowers had less than five percent equity, referred to as "near-negative equity," in the fourth quarter, CL said.
Together, negative equity and near-negative equity loans accounted for 27.9% of all residential properties with a mortgage nationwide.