once-epidemic level of underwater properties retreated further into history in
2016 as another 1 million homeowners regained equity in their homes. CoreLogic said on Thursday that 48 million
homes, about 93.8 percent of those with a mortgage, now have positive
equity peaked at 26 percent of mortgaged residential properties in Q4 2009
based on the company's equity data analysis, which began in Q3 2009.
Negative equity, often referred to
as being "underwater" or "upside down," applies to
borrowers who owe more on their mortgages than their homes are worth. Negative
equity can occur because of a decline in home value, an increase in mortgage
debt or both.
The mortgaged homes that remained in
negative territory at the end of the fourth quarter of 2016 numbered 3.17
million, a 6.2 percent rate. This is
down 2 percent from the third quarter's total of 3.23 million homes or 6.3
percent of all mortgaged homes, and down 25 percent from the fourth quarter of
2015 when there were 4.23 million homes without equity.
Those remaining properties lacking
equity represent an aggregate of $283 in negative value, down from the third quarter
by approximately $700 million and a decrease of $26 billion from $308.9 billion
in the 4th quarter of the previous year. Nationwide, homeowners with a mortgage
(about 63 percent of all homeowners) gained $783 billion in equity over the
year, an increase of 11.7 percent. On
average, equity increased about $13,700 from Q4 2015 to Q4 2016 (for mortgaged
properties). Washington had an average increase of $31,000, while Delaware
experienced a small decline.
Dr. Frank Nothaft, chief economist
for CoreLogic, said "The equity build-up has been supported by home-price
growth and paydown of principal. The CoreLogic Home Price Index for the U.S.
rose 6.3 percent over the year ending December 2016. Further, about one-fourth
of all outstanding mortgages have a term of 20 years or less, which amortize
more quickly than 30-year loans and contribute to faster equity
The highest percentage of homes with
negative equity continues to be in Nevada which was among states hardest hit by
price declines and foreclosures starting in 2008. Of mortgaged homes in that state, 13.6 percent
are underwater. Florida follows at 11.6
percent; Illinois (11.1 percent), Rhode Island (10 percent) and Arizona (9.8
percent) round out the top five. These states
combined account for 29.7 percent of negative equity in the U.S., but only 16.3
percent of outstanding mortgages.
Texas had the highest percentage of
homes with positive equity at 98.4 percent, followed by Hawaii (98.1 percent),
Alaska (97.9 percent), Colorado (97.9 percent), Oregon (97.9 percent), Utah
(97.9 percent) and Washington (97.9 percent).
"Home equity gains were
strongest in faster-appreciating and higher-priced home markets," said
Frank Martell, president and CEO of CoreLogic. "The states with the
largest home-price appreciation last year, according to the CoreLogic Home
Price Index, were Washington and Oregon at 10.2 percent and 10.3 percent,
respectively, with average homeowner equity gains of $31,000 and $27,000,
respectively. This is double the pace for the U.S. as a whole. And while
statewide home-price appreciation was slower in California at 5.8 percent, the
high price of housing there led to California homeowners gaining an average of
$26,000 in home equity wealth last year."