About 759,000 U.S. properties regained equity in the second quarter, bringing the total number of mortgaged residential properties with equity at the end of Q2 to approximately 45.9 million, or 91% of all mortgaged properties, CoreLogic reports.
Still, about 4.4 million properties remain in negative equity. That's about 8.7% of all mortgaged properties.
This is an improvement compared to the first quarter, when 5.1 million homes, or 10.2%, were underwater. Quarter over quarter, this number decreased 1.5 percentage points.
It's also an improvement compared to the second quarter of 2014, when about 5.4 million homes, or about 10.9%, had negative equity.
The number of underwater homes has decreased year over year by 1.1 million, or 19.4%, CoreLogic says.
Nationwide, borrower equity increased by $691 billion, year over year, in Q2.
The national aggregate value of negative equity was $309.5 billion at the end of Q2, falling approximately $28.5 billion from $338 billion in Q1 and down 11.6% from $350 billion in Q2 2014.
Of the properties that were underwater this quarter, approximately 9 million, or 17.8%, had less than 20% equity (referred to as ‘under-equitied’), while 1.1 million, or 2.3%, had less than 5% equity (referred to as ‘near-negative equity’).
‘Home price appreciation and foreclosure completions both reduce the number of homeowners with negative equity – the latter because most homeowners who lost homes through foreclosure had some level of negative equity,’ says Frank Nothaft, chief economist for CoreLogic, in a release. ‘Between June 2014 and June 2015, the CoreLogic national Home Price Index rose 5.6 percent, and we reported the number of homes completing foreclosure proceedings exceeded one-half million. Both of these factors helped reduce the number of homeowners with negative equity by one million over the year ending in June.’
‘For much of the country, the negative equity epidemic is lifting. The biggest reason for this improvement has been the relentless rise in home prices over the past three years, which reflects increasing money flows into housing and a lack of housing stock in many markets,’ says Anand Nallathambi, president and CEO of CoreLogic. ‘CoreLogic predicts home prices to rise an additional 4.7 percent over the next year, and if this happens, 800,000 homeowners could regain positive equity by July 2016.’
States with the highest number of underwater properties in the second quarter included Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%). Combined, these five states accounted for 31.7% of negative equity in the U.S.
States with the highest percentage of properties in positive equity included Texas (97.9%), Alaska (97.6%), Hawaii (97.5%), Montana (97.2%) and Colorado (96.7%).
The report shows that the bulk of mortgaged properties with positive equity is concentrated at the high end of the housing market. For example, 95% of homes valued at greater than $200,000 have equity, compared with 87% of homes valued at less than $200,000.