CoreLogic: Underwater Mortgages Fall As Home Prices Rise

Posted by Patrick Barnard on June 12, 2013 No Comments
Categories : Required Reading

Due mostly to rising home prices, the percentage of U.S. residential mortgages that were in negative equity or ‘underwater’ at the end of the first quarter fell to 19.8%, or 9.7 million, according to CoreLogic's first quarter home equity report.

That is down from 21.7% compared to the fourth quarter of 2012 and down about 25% from the fourth quarter of 2011.

Looking at the 50 states, Nevada had the highest percentage of mortgaged properties in negative equity at 45.4%. Looking at the major metropolitan areas, the Tampa-St. Petersburg-Clearwater, Fla., region had the most mortgages underwater at 44.1%.

About 850,000 residential properties in the U.S. returned to a state of positive equity during the first quarter, according to CoreLogic. However, of the 39 million residential properties with positive equity, 11.2 million had less than 20% equity.

‘During the past year, 1.7 million borrowers have regained positive equity,’ said Mark Fleming, chief economist for CoreLogic. ‘We expect the pent-up supply that falling negative equity releases will moderate price gains in many of the fast-appreciating markets this spring.’

CoreLogic notes that the recovery is still far below peak home price levels. However, a lack of inventory in many areas, coupled with pent-up demand for single-family homes, should help close the gap.

Last month's report showed that 10.4 million mortgages were underwater. That is down from 10.5 million, or 21.7% of all residential properties with a mortgage, at the end of the fourth quarter of 2012.

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