IRVINE, Calif.— Nearly 273,000 U.S. homes returned to positive equity in the third quarter of 2014, bringing the total number of mortgaged residential properties with equity to approximately 44.6 million, or 90% of all mortgaged properties, according to CoreLogic.
The company said that nationwide its analysis shows borrower equity increased year over year by approximately $800 billion in Q3 2014.
The CoreLogic analysis also indicates that approximately 5.1 million homes, or 10.3% of all residential properties with a mortgage, were still in negative equity as of Q3 2014 compared to 5.4 million homes, or 10.9%, for Q2 2014. This compares to a negative equity share of 13.3%, or 6.5 million homes, in Q3 2013, representing a year-over-year decrease in the number of underwater homes by almost 1.5 million (1,433,296), or 3%.
For the homes in negative equity status, the national aggregate value of negative equity was $338 billion at the end of Q3 2014, down $10.2 billion from approximately $348.2 billion in the second quarter 2014, CoreLogic said. On a year-over-year basis, the value of negative equity declined from $403.2 billion in Q3 2013, representing a decrease of 16.2% in 12 months.
“Of the 44.6 million residential properties with positive equity, approximately 9.4 million, or 19%, have less than 20% equity (referred to as “under-equitied”) and 1.3 million of those have less than 5% equity (referred to as near-negative equity),” CoreLogic said in a statement. “Borrowers who are “under-equitied” may have a more difficult time refinancing their existing homes or obtaining new financing to sell and buy another home due to underwriting constraints. Borrowers with near-negative equity are considered at risk of moving into negative equity if home prices fall. In contrast, if home prices rose by as little as 5%, an additional 1 million homeowners now in negative equity would regain equity.”
Highlights as of Q3 2014:
- Nevada had the highest percentage of mortgaged properties in negative equity at 25.4%, followed by Florida (23.8%), Arizona (19%), Rhode Island (14.8%) and Illinois (14.1%). These top five states together account for 33.1% of negative equity in the United States.
- Texas had the highest percentage of mortgaged residential properties in an equity position at 97.4%, followed Alaska (97.1%), Montana (97.1%), Hawaii (96.4%) and North Dakota (96.1%).
- Of the 25 largest Core Based Statistical Areas (CBSAs) based on population, Tampa-St. Petersburg-Clearwater, Fla., had the highest percentage of mortgaged properties in negative equity at 25.5%, followed by Phoenix-Mesa-Scottsdale, Ariz. (19.3%), Chicago-Naperville-Arlington Heights, Ill. (16.3%), Riverside-San Bernardino-Ontario, Calif. (15%) and Atlanta-Sandy Springs-Roswell, Ga. (14%).
- Of the same largest 25 CBSAs, Houston-The Woodlands-Sugar Land, Texas had the highest percentage of mortgaged properties in an equity position at 97.5%; followed by Dallas-Plano-Irving, Texas (97%); Anaheim-Santa Ana-Irvine, Calif. (96.6%); Portland-Vancouver-Hillsboro, Ore. (96.4%) and Denver-Aurora-Lakewood, Col. (95.9%).
- Of the total $338 billion in negative equity, first liens without home equity loans accounted for $178 billion, or 53%, aggregate negative equity, while first liens with home equity loans accounted for $160 billion, or 47%.
- Approximately 3 million underwater borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $230,000. The average underwater amount is $58,000.
- Approximately 2.1 million underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $299,000.The average underwater amount is $78,000.
- The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 94% of homes valued at greater than $200,000 have equity compared with 85% of homes valued at less than $200,000.
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