More home owners are edging above water with their mortgages: 2.5 million U.S. properties emerged from underwater or negative equity in the second quarter, according to CoreLogic. The total number of residential properties with a mortgage with equity stands at 41.5 million.

However, some home owners are still waiting for equity to return: 14.5 percent of all residential properties with a mortgage—or 7.1 million homes—are still considered underwater, with owners owing more on their mortgage than their home is currently worth. But that number has been falling as home prices rise across the nation. At the end of the first quarter, that number had stood at 9.6 million.

“Seeing fewer underwater mortgages is no mystery, given the continued rise in home values over the last 12 months,” says Mark Twerdok, head of KPMG’s credit risk practice. “Investor buying has been the initial driver of the appreciation in areas with the most underwater homes. Now, investor buying has widened to include the owner-occupied market [buyers who intend to live in the homes they purchase]. This is good news since these more traditional buyers will ensure the appreciation trend will continue over the near future. In addition, as long as new construction does not change the supply/demand balance in favor of excess supply, appreciation should persist until most of the underwater loans are gone.”

Thirty-five percent of all negative equity mortgages are concentrated in five states alone:

• Florida
• Nevada
• Arizona
• Michigan
• Georgia

Source: “Up For Air: Big Decline In Underwater Mortgages,” realtor.com (Oct. 24, 2013)