The number of U.S. residential properties in negative equity decreased by the end of the first quarter of this year, according to new data from Santa Ana, Calif.-based CoreLogic.
CoreLogic reports that 11.4 million residential properties, or 23.7% of all homes with a mortgage, were in negative equity at the end of the first quarter. This is down from 12.1 million properties (25.2%) in the fourth quarter of 2011. An additional 2.3 million borrowers had less than 5% equity – referred to as near-negative equity – in the first quarter, while more than 700,000 households regained a positive equity position in the first quarter.
Of the properties in negative equity, there were 6.9 million first liens without home equity loans. This group of borrowers had an average mortgage balance of $212,000 in the first quarter and was underwater by an average of $47,000, according to CoreLogic. For all first-lien-only borrowers, the negative equity share was 19%, while 42% of all first-lien-only borrowers had a loan-to-value ratio of 80% or higher.
Nevada had the highest negative equity percentage during the first quarter, with 61% of all mortgaged properties underwater, followed by Florida (45%), Arizona (43%), Georgia (37%) and Michigan (35%). These top five states combined had an average negative-equity share of 44.5%, while the remaining states had a combined average negative-equity share of 15.9%.
‘In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative-equity share,’ says Mark Fleming, chief economist for CoreLogic. ‘This is a meaningful improvement that is driven by quickly improving outlooks in some of the hardest-hit markets. While the overall stagnating economic recovery will likely slow housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk.’
