of a million homeowners emerged from being underwater on their
mortgages during the first quarter of 2013 and 39 million households
now have positive equity in their homes. However, millions of those
homeowners are only narrowly in that position. CoreLogic reported
Wednesday that 850,000 more homes returned to a state of positive
equity between January and March.
often referred to as "underwater" or "upside down," means
that borrowers owe more on their mortgages than their homes are
worth. Negative equity can occur because of a decline in value, an
increase in mortgage debt or a combination of both.
At the end of the
quarter 9.7 million households or 19.8 percent of all properties with
a mortgage remained underwater compared to 10.5 million homes or 21.7
percent of mortgaged properties at the end of the fourth quarter of
2012. The aggregate value of underwater property decreased more
than $50 billion to $580 billion quarter-to-quarter. CoreLogic said
this decrease was largely driven by rising home prices.
But many of the
homes in positive territory remain on shaky ground. Of those 39
million properties, 11.2 million have less than 20 percent equity,
what CoreLogic calls "under-equitied" and may have a more
difficult time refinancing. Another 2.1 million had less than 5
percent equity, referred to as near-negative equity. These
properties are at risk of returning to negative status should home
prices fall. Under-equitied mortgages account for 23 percent of
mortgaged properties. The average amount of equity for all
properties with a mortgage is 32.8 percent.
Of the $580 billion
in negative equity, homes with only first liens accounted for $290
billion or one-half the aggregate negative balance. The remaining
half were properties with home equity loans. Among the 6.0 million
upside-down homeowners with only first mortgage liens the average
mortgage balance was $211,000 and they were underwater by an average
of $48,000. The 3.7 million borrowers with both first and second
mortgages had average total loan balances of $294,000 and were
negative by an average of $79,000.
said that higher end properties were more likely to have positive
equity than the low end. For
example, 88 percent of homes valued at greater than $200,000 have
equity compared with 73 percent of homes valued at less than
home price gains of 2012 and the beginning of 2013 have had a big
impact on the distribution of residential home equity," said Dr.
Mark Fleming, chief economist for CoreLogic. "During the past year,
1.7 million borrowers have regained positive equity. We expect the
pent-up supply that falling negative equity releases will moderate
price gains in many of the fast-appreciating markets this spring."
percentage of negative equity properties were in Nevada at 45.4
percent. Florida was second at 38.1 percent followed by Michigan (32
percent), Arizona (31.3 percent) and Georgia (30.5 percent.) These
top five states combined account for 32.8 percent of negative equity
in the U.S.