These cities and states have the highest number of underwater mortgages

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Two-and-a-half million U.S. homeowners were underwater on their mortgages as of the fourth quarter of 2017, according to property analytics provider CoreLogic.

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While the national aggregate value of negative equity was $283 billion, down about 1% year-over-year in the fourth quarter, some cities still have a large supply of owners owing more on their mortgages than their homes are worth.

In terms of metropolitan areas, Miami had the highest underwater homeownership rate, according to CoreLogic’s Home Equity Report, with the share of negative equity from all mortgages at 13.1%. Chicago followed Miami with negative equity at 10.1%, or more than 135,000 borrowers, while Las Vegas saw rates at 9.2%.

The amount of negative equity increases for borrowers when home values fall. It also routinely prevents homeowners from selling those properties because they are forced to make up the difference, which, in turn, affects the local housing market.

The national underwater homeownership rate is 4.9%. In New York City, 87,000 borrowers, or 5.4% of the market, ended the year with negative equity, while only 26,800 did so in Los Angeles.

The states with the highest shares of upside down mortgages were Louisiana, Illinois, Florida, Connecticut, Nevada and Rhode Island.

The 2008 housing bubble substantially reduced home values after loose lending standards led to an increased number of defaults and foreclosures. Since the crisis, a low interest rate environment and stricter regulation has helped the housing market recover.

Homeowners in western states, including California and Washington, saw large increases in home prices throughout the past year, and therefore corresponding equity gains. In California, the average homeowner gained $44,500 in equity in 2017, while Washington residents gained just over $40,000.

Overall, homeowner equity increased by $908 billion in 2017.