A new industry report by Realty Trac says negative equity in home values has been steadily declining.  According to Realty Trac, the recent peak in negative equity was in May 2012 when 12.8 million US residential properties or 29% or all homes with a mortgage were deeply (borrower owes at least 25% more on the mortgage than the home is currently worth) underwater.  With the recent increase in home prices, many homeowner's are not trapped in a home they can no longer sell because they have no equity.  With the rise in the number of properties with equity, the result will be a larger inventory of homes listed for sale and more for buyers to choose from.

     Realty Trac's report says the states with the highest per cent of equity rich residential property at the end of 2013 were HI - 36%, NY - 33%, CA - 26%, MT - 24%, ME - 24%, and Washington DC - 24%.  Says Daren Bloomquist, Realty Trac VP, there are still homeowners "in such a deep equity hole it will take years for them to regain their equity."  Bloomquist says the longer these homeowners remain in a negative equity position without relief in the form of a principal reduction, the more likely foreclousre will remain their path of least resistance.