The housing market is projected to improve in the coming years — albeit slowly. While we are a long way to full recovery, the signs are there. Indeed, according to a CoreLogic report released this month, the number of underwater mortgages has declined from 12.1 million, or 25.2% of all mortgages, at the end of 2011 to 11.4 million, or 23.7% of all mortgages, at the end of the first quarter of 2012.

Read: States with the Most Homes Underwater

Of course, the recovery isn’t even, and while the housing market in some states already may be improving, other states still have a long way to go before their housing markets recover. Based on CoreLogic’s report on negative equity for the first quarter of 2012, 24/7 Wall St. identified the 10 states with the highest percentage of homes with underwater mortgages. The data show that the states with the most negative equity are the ones most severely affected by falling home prices during the recession.

Since the housing bubble burst in 2006, home prices have fallen by 32.6% nationwide. In many cases, the decline in the value of a home was so steep that the amount of debt became worth more than home’s market value.

The amount of outstanding debt compared to total property value in these states is staggering. Nationwide, the value of all mortgaged property is $12.2 trillion. Outstanding debt on those properties is $8.6 trillion. In other words, 70.5% of the value of all homes is in debt. In five of the worst-off states, this relationship, known as the loan-to-value ratio, is 80% or more. In the case of Nevada, it is an unbelievable 114%. Negative equity in the state is more than $13 billion greater than total property value.

Of the 10 states with the highest percentage of mortgages with negative equity, nine have among the greatest declines in home value from the fourth quarter of 2006 to the fourth quarter of 2011. All of the top seven states with the largest housing price declines are on this list, including Nevada, where prices plummeted by nearly 60% during that time.

Local economic hardships usually coincide with falling home prices. For example, unemployment rates are exceptionally high in these states. Six of the states on our list have unemployment rates higher than the national average, including Nevada and California, which have the first and third highest rates in the country, respectively.

Many of the states with high negative equity also have a high percentage of homeowners on the brink of losing their investment. According to April data from CoreLogic, several of these states have among the highest percentage of homes that have been delinquent on their mortgage payments for 90 days or more. Three are in the top four, including Florida, where the rate was 16.8% in April.

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24/7 Wall St. reviewed CoreLogic’s Q1 2012 negative equity report to identify the states with the highest percentage of mortgages with negative equity. We measured this alongside a state’s total property value, mortgage debt outstanding and total home equity. We also looked at the percentage of homes with near negative equity, or homes with the value less than 5% more than the debt owed. Because of sample size, seven states were excluded from the results. These states, which include Wyoming and Vermont, account for fewer than 5% of U.S.’s total population. In addition to CoreLogic’s data, 24/7 Wall St. reviewed a variety of additional metrics. We looked at May 2012 unemployment rates provided by the Bureau of Labor Statistics, and at median income, median home value and poverty rates from the U.S. Census Bureau for 2010. Declines in home value from the fourth quarter of 2006 through the fourth quarter of 2011 were provided by Fiserv. Fourth-quarter 2011 delinquency (90+ days) and foreclosure rates are from CoreLogic. Forecast changes in home value by state are from Fiserv.

These are the states with the most homes underwater.

10. Ohio
>Pct. mortgages underwater: 24.6%
>Total property value: $305.30 billion (13th highest)
>Mortgage debt outstanding: $233.19 billion (13th highest)
>Pct. mortgages 90+ days delinquent: 6.6% (14th highest)

Of the state’s 2.16 million mortgages, about 529,800, or nearly a quarter of homes with mortgages, were underwater as of the first quarter of this year. Meanwhile, an additional 125,901 homes, or 5.8% of the homes in the states, were near negative equity. In April, 6.6% of those with mortgages were 90 days or more overdue on their payments, and 3.4% were in foreclosure — the 10th-highest proportion in the country. While the state has the 10th-highest percentage of mortgages with negative equity, it has the seventh-highest total loan to value ratio of 76.4%.

9. Maryland
>Pct. mortgages underwater: 24.8%
>Total property value: $416.56 billion (9th highest)
>Mortgage debt outstanding: $293.50 billion (9th highest)
>Pct. mortgages 90+ days delinquent: 7.9% (6th highest)

Between the end of 2006 and the end of 2011, home prices in Maryland fell by 28.9%, the 10th-largest decline in the country. Nearly 30% of Maryland’s homes with mortgages either had negative equity or were near negative equity as of the first quarter of this year. Fortunately, Maryland’s economy is better than most. The state’s unemployment rate in May was 6.8%, and Maryland has the highest median income in the country, which should help mitigate some of the pressure on homeowners. However, while foreclosure rates in April were the 17th highest at 3%, the state has the sixth-highest percentage of mortgages that are 90 days or more delinquent on their payments.

8. Idaho
>Pct. mortgages underwater: 26.3%
>Total property value: $46.88 billion (13th lowest)
>Mortgage debt outstanding: $34.70 billion (15th lowest)
>Pct. mortgages 90+ days delinquent: 4.8% (17th lowest)

The total property value of the state of Idaho is an estimated $46.9 billion. Total outstanding debt is estimated at $34.7 billion. Between the end of 2008 and the end of last year, home prices fell by 22%, the third-highest decline in the country and worse than states like Florida and Arizona. Fiserv projects the state’s housing market is making a recovery. Home prices are expected to rise by 4.1% in 2012 — the largest increase among all states. Between the end of this year and the end of 2013, they are expected to increase an additional 12% — far more than any other state.

Also Read: America’s Sickest Housing Markets

7. Illinois
>Pct. mortgages underwater: 28%
>Total property value: $480.02 billion (7th highest)
>Mortgage debt outstanding: $368.11 billion (6th highest)
>Pct. mortgages 90+ days delinquent: 8.8% (4th highest)

There were 624,577 negative equity mortgages in Illinois, higher than all states except for California and Florida. Together with near negative equity mortgages, that number rises to 734,459. Homeowners in Illinois have more than $368 billion in mortgage debt outstanding, or more than three times the $112 billion those homeowners have in home equity. Some of the homeowners are in significant trouble. About 5.3% of all homes in the state are in foreclosure — more than all states except for Florida and New Jersey.

6. California
>Pct. mortgages underwater: 30.5%
>Total property value: $2,690 billion (the highest)
>Mortgage debt outstanding: $1,911 billion (the highest)
>Pct. mortgages 90+ days delinquent: 6.2% (18th highest)

The California housing market is so large that it has a strong effect on national averages. About 22% of both the total property value and outstanding mortgage debt in the U.S. is in California. Between the fourth quarter of 2006 and the fourth quarter of last year, home prices fell in California by an estimated 46.7% — the fourth-largest decline in the country after only Nevada, Arizona and Florida. The state’s mortgage owners have taken a severe hit as a result. Not helping matters much is the state’s high unemployment rate. In May it was still in the double digits at 10.8%, the third highest in the country.

5. Michigan
>Pct. mortgages underwater: 35.6%
>Total property value: $193.15 billion (18th highest)
>Mortgage debt outstanding: $161.24 billion (18th highest)
>Pct. mortgages 90+ days delinquent: 5.5% (24th lowest)

Despite more than one in three homes with negative equity, there are some positive signs in Michigan. The state was the only one on the list with rising home prices in 2011, with prices increasing a modest 1.7%. Meanwhile, Michigan’s unemployment rate of 8.5% ranked 12th in the U.S. in May. This is quite the improvement from the long period — until June 2010 — that Michigan held the dubious title of having the highest unemployment rate in the nation, topping out at more than 15% at the height of the recession.

4. Georgia
>Pct. mortgages underwater: 37.2%
>Total property value: $293.01 billion (15th highest)
>Mortgage debt outstanding: $246.52 billion (11th highest)
>Pct. mortgages 90+ days delinquent: 7.2% (8th highest)

In 2011 alone, home prices fell by approximately 12.7% in Georgia, more than any other state in the country. Measured from the end of 2006, home prices have plunged nearly 35%, and are projected to fall an additional 4.2% in 2012. More than 7% of homeowners with a mortgage are 90 days or more delinquent on their payments as of April, the eighth-highest rate in the country. In all, total outstanding mortgage debt comes to $246.5 billion, the equivalent of 84.1% of the total property value in the state. This is the fourth highest loan-to-value ratio in the country.

3. Arizona
>Pct. mortgages underwater: 43.4%
>Total property value: $249.17 billion (17th highest)
>Mortgage debt outstanding: $221.71 billion (15th highest)
>Pct. mortgages 90+ days delinquent: 5.8% (20th highest)

While states such as Arizona helped fuel economic growth in the mid-2000s with rising home values and new construction, the housing market began to hollow by 2007 and 2008. Case-Schiller predicts that home prices in Arizona will fall 9% in 2012, more than any other state. But other signs are pointing to an improving housing market, albeit modestly. When 24/7 Wall St. looked at underwater mortgages in March, 48.3% of Arizona’s mortgages were underwater, the second-highest rate in the country and nearly five percentage points higher than a quarter later. Meanwhile, total property value has risen a modest $6 billion between the fourth quarter 2011 and the first quarter of 2012, while outstanding debt has fallen by about $4.5 billion.

2. Florida
>Pct. mortgages underwater: 45.1%
>Total property value: $777.34 billion (3rd highest)
>Mortgage debt outstanding: $684.97 billion (2nd highest)
>Pct. mortgages 90+ days delinquent: 16.8% (the highest)

Home prices in Florida were nearly cut in half between 2006 and 2011. By the end of the first quarter, there were more than 1.9 million negative equity mortgages in the state with another 168,000 near delinquency. Homeowners in the state owe about $685 billion in mortgage payments, more than any other state except for California. Florida’s unemployment rate of 8.6% is above the national average of 8.2%, but it still could help it get out of the mortgage mess quicker than states such as California and Nevada, which have much higher unemployment rates.

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1. Nevada
>Pct. mortgages underwater: 61.2%
>Total property value: $93.39 billion (23rd lowest)
>Mortgage debt outstanding: $106.45 billion (21st highest)
>Pct. mortgages 90+ days delinquent: 12.1% (2nd highest)

No state has been hit harder by the housing downturn than Nevada. Between the end of 2006 and the end of 2011, home values have tanked nearly 60%, higher than any other state by 7.2 percentage points. In 2011 alone, home prices fell another 9.4%. This has left many Nevadans owing significantly more on their homes than they are worth. The average loan-to-value ratio of a Nevada home is 114%, 25 percentage points higher than Arizona’s 89% (the second highest). In May, 24/7 Wall St. reported that 71% of mortgages in the state’s largest city, Las Vegas, were underwater, with values declining 63.2% from their peak. The state’s unemployment rate is 11.6%, the highest of any state in the U.S., making it that much harder for many Nevadans and damping hopes of a quick recovery.

Samuel Weigley and Michael B. Sauter

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