An additional 4 million homes regained positive equity in 2013
CoreLogic said today, leaving 6.5 million homes still underwater; about half
the number that were in that position at the end of 2009. Homes still in a negative equity position
constitute 13.3 percent of all residential properties with a mortgage while
42.7 million homeowners now have at least some equity.
While the negative equity problem has been slowly resolving CoreLogic
said that the percentage of homes underwater was virtually unchanged from the
end of the third quarter. This is due to
a slowdown in the quarterly growth rate of CoreLogic's Home Price Index (HPI.)
While homeowners are seeing the net worth of their homes increase, many
of the margins are still narrow. CoreLogic
says that about 10 million of the homes in positive equity have less than 20
percent and may have a difficult time refinancing their homes. These "under-equitied" properties accounted
for 21.1 percent of mortgaged homes nationwide.
More than 1.6 million properties are referred to as "near-negative
equity," that is having less than 5 percent equity and these remain in danger
of slipping back underwater if home prices decline.
"The plight of the underwater borrower has improved dramatically since negative
equity peaked in December 2009 when more than 12 million mortgaged homeowners
were underwater," said Mark Fleming, chief economist for CoreLogic. "Over the past
four years, more than 5.5 million homeowners have regained equity, reducing their
risk of foreclosure and unlocking pent-up supply in the housing market."
The national aggregate value of negative equity was $398.4 billion for
fourth quarter 2013, compared to $401.3 billion for third quarter 2013, a
decrease of $2.9 billion. Homes with only one mortgage account for slightly
more than half of the $398 billion - $205 billion - and about two-third of
underwater homeowners, 3.9 million. The
2.6 million properties with both a first mortgage and a home equity loan
account for $193 billion. Homes with one mortgage were underwater an average of
$52,000 while homes with two mortgages had an average of $75,000 in negative
Nevada continues to have the highest percentage of underwater homes at
30.4 percent. In Florida 28.1 percent of
mortgaged homes lack equity and in Arizona 21.5 percent, followed by Ohio (19.0
percent), and Illinois (18.7 percent.)
These five states combine to account for 36.9 percent of all negative
equity in the country. Four of the five
large metropolitan areas with the highest levels of negative equity are in
these states, two in Florida (Orlando-Kissimmee and Tampa-St. Petersburg-Clearwater)
and one each in Arizona (Phoenix) and Illinois (Chicago). Atlanta rounds out the top five.
The bulk of home equity for mortgaged properties is concentrated at the
high end of the housing market. For example, 92 percent of homes valued at
greater than $200,000 have equity compared with 81 percent of homes valued at
less than $200,000.
"Stability and growth in the housing market are essential for a durable
recovery of the U.S. economy," said Anand Nallathambi, president and CEO of
CoreLogic. "The rebound in home prices in 2013 helped 4 million property owners
regain at least some positive equity in their largest asset-their home. We
still have a long way to go to eliminate the negative equity overhang but
significant progress is being made every day across most of the country."