ABC news has an article based on a report from First American CoreLogic stating 60% of homeowners with mortgages higher than the value of their homes live in the states of California, Arizona, Florida, Nevada, Georgia and Michigan.

To define the locations further:
The problem is much worse in far-flung suburban neighborhoods where builders flooded the market with new homes and buyers put down small, or no, down payments, said Mark Fleming, First American CoreLogic’s chief economist. In desirable urban neighborhoods and close-in suburbs, “a lot of people bought their homes years ago. It’s much more difficult for them to be in a negative equity situation.” Fleming said.

Several years ago I drove from Southern California into Nevada and Arizona taking a very roundabout path through those states.  I was amazed by the massive amount of new tract construction taking place in outlying areas with no local employment centers obvious to me.  Granted, the employment centers might have been in the areas I didn’t drive through, but I really didn’t see any of the signs of concentrated employment, either close by, or much farther away.

So, why the building in far-flung suburbs?  The properties were new, and were affordable under the lending programs being offered at the time.  It didn’t make much sense to me at the time, and in retrospect, it still doesn’t make much sense.

With the realization that real estate is local by nature, those far-flung suburbs will be the ones that require more intervention by lenders and government programs, but they are also the ones that will suffer the largest overall price declines.