CoreLogic: About 5.1 Million Properties Still In Negative Equity

Posted by Patrick Barnard on June 17, 2015 No Comments
Categories : Mortgage Servicing

About 254,000 U.S. properties regained equity in the first quarter, bringing the total number of mortgaged residential properties with positive equity to approximately 44.9 million, or 90% of all mortgaged properties, CoreLogic reports.

Still, about 5.1 million properties remain in negative equity. That's about 10.2% of all properties with a mortgage.

But it's a significant improvement compared to the fourth quarter, when 5.4 million homes, or about 10.8% of all homes with a mortgage, were underwater. Quarter over quarter, the number of homes with negative equity decreased by 4.7%.

It's also a significant improvement compared to the first quarter of 2014, when about 6.3 million homes, or about 12.9%, had negative equity.

Since the first quarter of 2014, the number of underwater homes has decreased by 1.2 million, or 19.4%, CoreLogic says.

Nationwide, borrower equity increased by $694 billion, year over year, due to rising home values.

The national aggregate value of negative equity as of the end of the first quarter was $337.4 billion, down approximately $11.7 billion from $349.1 billion in the fourth quarter and down 13% from $388 billion in the first quarter of 2014.

Of the properties that were underwater in the first quarter, approximately 9.7 million had less than 20% equity (referred to as ‘under-equitied’), while 1.3 million, or 2.7%, had less than 5% equity (referred to as near-negative equity).

‘The CoreLogic Home Price Index for the U.S. was up 2.5 percent during the first quarter of 2015, which has improved the equity position of homeowners,’ explains Frank Nothaft, chief economist for CoreLogic, in a release. ‘About 90 percent of homeowners now have housing equity and, as a result, have experienced an increase in wealth, which can spur additional consumption and investment expenditures. The remaining 10 percent of owners with negative equity will find their home value rising while they continue to pay down principal on their amortizing mortgage loan.’

‘Many homeowners are emerging from the negative equity trap, which bodes well for a continued recovery in the housing market,’ adds Anand Nallathambi, president and CEO of CoreLogic. ‘With the economy improving and homeowners building equity, albeit slowly, the potential exists for an increase in housing stock available for sale, which would ease the current imbalance in supply and demand. There are still about 5 million homeowners who are underwater, and we estimate that a further five percent appreciation in home values across the U.S. would reduce the number of owners with negative equity by about one million.’

States with the highest number of underwater properties in the first quarter included Nevada (23.1%), Florida (21.2%), Illinois (16.8%), Arizona (16.8%) and Rhode Island (15.7%). Combined, these five states accounted for 31.4% of all homes with negative equity in the U.S.

States with the highest percentage of properties in positive equity included Texas (97.7%), Hawaii (96.9%), Alaska (96.8%), Montana (96.8%) and North Dakota (96.2%).

Once again, the report shows that the bulk of mortgaged properties with positive equity is concentrated at the high end of the housing market. For example, 94% of homes valued at greater than $200,000 have equity, compared with 85% of homes valued at less than $200,000.

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