CoreLogic: 791K homes get positive equity in 3Q
IRVINE, Calif. – Dec. 17, 2013 – CoreLogic released its third quarter 2013 analysis, and it finds that about 791,000 more residential U.S. properties returned to a state of positive equity and are no longer underwater.
However, nearly 6.4 million homes – 13 percent of all residential properties with a mortgage – were still in negative equity at the end of the third quarter. Still, that number is down from 7.2 million homes – 14.7 percent of all residential properties with a mortgage – at the end of the second quarter of 2013.
In a state-by-state comparison, Florida ranked second in percentage of underwater mortgages with 28.8 percent. Nevada had the highest percentage of mortgaged properties in negative equity at 32.2 percent, followed by Arizona (22.5 percent), Ohio (18.0 percent) and Georgia (17.8 percent). The top five states accounted for 36.4 percent of negative equity in the U.S.
Florida also ranked high in a city-by-city breakdown of underwater mortgages. Of the largest 25 metropolitan areas, Orlando-Kissimmee-Sanford, Fla., had the highest percentage of mortgaged properties in negative equity at 32.3 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (30.1 percent). The last three metro areas in the top five include Phoenix-Mesa-Scottsdale, Ariz. (23.2 percent), Riverside-San Bernardino-Ontario, Calif. (20.8 percent) and Chicago-Naperville-Arlington Heights, Ill. (20.5 percent).
Negative equity, 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.
Of 42.6 million residential U.S. properties with positive equity, 10 million have less than 20 percent. Borrowers with less than 20 percent, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. Under-equitied mortgages accounted for 20.4 percent of all residential properties with a mortgage nationwide in the third quarter of 2013, with more than 1.5 million residential properties at less than 5 percent equity, referred to as near-negative equity. Properties with near-negative equity are considered at risk should home prices fall.
“Negative equity will decline even further in the coming quarters as the housing market continues to improve,” says Mark Fleming, chief economist for CoreLogic.
© 2013 Florida Realtors®