CoreLogic: 256,000 Properties Regained Equity in Third Quarter

CoreLogic, Irvine, Calif., said 256,000 properties regained equity in the third quarter, bringing the total number of mortgaged residential properties with equity at the end of the quarter to 46.3 million, or 92.0 percent of all homes with an outstanding mortgage.  

Nationwide, CoreLogic said borrower equity increased year over year by $741 billion in the third quarter. The total number of mortgaged residential properties with negative equity stood at 4.1 million, or 8.1 percent, down by 4.7 percent quarter over quarter from 4.3 million homes, or 8.7 percent and down by 20.7 percent year over year from 5.2 million homes, or 10.4 percent.  

Corelogic said for homes in negative equity status, the national aggregate value of negative equity fell to $301 billion at the end of the third quarter, declining by $8.1 billion from $309.1 billion in the second quarter, a decrease of 2.6 percent. On a year-over-year basis, the value of negative equity declined overall from $341 billion, a decrease of 11.8 percent in 12 months.   

The report said of more than 50 million residential properties with a mortgage, 8.9 million, or 17.6 percent, have less than 20 percent equity (referred to as “under-equitied”) and 1.1 million, or 2.2 percent, have less than 5 percent equity (referred to as near-negative equity).  

“Home price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market,” said Frank Nothaft, chief economist for CoreLogic.  

Other report highlights:  

–Nevada had the highest percentage of mortgaged residential properties in negative equity at 19.0 percent, followed by Florida (17.8 percent), Arizona (14.6 percent), Rhode Island (12.3 percent) and Maryland (12.1 percent). Combined, these five states account for 29.3 percent of negative equity in the U.S.

–Texas had the highest percentage of mortgaged residential properties in positive equity at 97.9 percent, followed by Alaska (97.7 percent), Hawaii (97.6 percent), Colorado (97.2 percent) and Montana (97.1 percent).

–Of the 10 largest metropolitan areas based on mortgage count, Phoenix-Mesa-Scottsdale, Ariz. had the highest percentage of mortgaged residential properties in negative equity at 14.2 percent, followed by Chicago-Naperville-Arlington Heights, Ill. (13.8 percent), Riverside-San Bernardino-Ontario, Calif. (11.4 percent), Washington-Arlington-Alexandria, DC-Va.-Md.-W.Va. (10.8 percent) and Atlanta-Sandy Springs-Roswell, Ga. (9.7 percent).

–Of the same 10 metropolitan areas, Houston-The Woodlands-Sugar Land, Texas had the highest percentage of mortgaged residential properties with positive equity at 98.2 percent, followed by Dallas-Plano-Irving, Texas (97.9 percent), Los Angeles-Long Beach-Glendale, Calif. (95.4 percent), Minneapolis-St. Paul-Bloomington, Minn.-Wis. (94.4 percent) and New York-Jersey City-White Plains, N.Y.-N.J. (94.3 percent).

–Of the total $301 billion in negative equity nationally, first liens without home equity loans accounted for $165 billion, or 54.8 percent, in aggregate negative equity, while first liens with home equity loans accounted for $136 billion, or 45.2 percent.

–Nearly 3.1 million underwater borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $229,000 and the average underwater amount is $58,000.

–Nearly 1.6 million underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $307,000 and the average underwater amount is $83,000.

–The bulk of positive equity for mortgaged residential properties is concentrated at the high end of the housing market. For example, 95 percent of homes valued at $200,000 or more have equity compared with 87 percent of homes valued at less than $200,000.  

“The rise in home prices, expected to be at least 5 percent in 2016, will continue to build wealth and confidence across America,” said Anand Nallathambi, president and CEO of CoreLogic. “As this process continues, it will provide support for the housing market and the broader economy throughout next year.”