CoreLogic: 550,000 Homeowners Regain Equity in 2Q

CoreLogic, Irvine, Calif., said, an additional 548,000 homeowners regained equity in the second quarter, a further sign that the housing market continues to improve.

The analysis said the increase brings the percentage of homes with positive equity to 92.9 percent of all mortgaged properties, or 47.2 million homes. Nationwide, home equity grew year over year by $646 billion, representing an increase of 9.9 percent in second quarter compared to a year ago.

Despite the positive news, mortgaged residential properties with negative equity stood at 3.6 million, or 7.1 percent of all homes with a mortgage. However, this represented a decrease of 13.2 percent from 4.2 million homes, or 8.2 percent, from the first quarter and a decrease of 19 percent from 4.5 million homes, or 8.9 percent, a year ago.

For homes in negative equity status, the national aggregate value of negative equity was $284 billion at the end of the second quarter, decreasing by $20.4 billion, or 6.7 percent, from $305 billion in the first quarter. From a year ago, value of negative equity declined overall from $314 billion a decrease of 9.5 percent.

“Home-value gains have played a large part in restoring home equity,” said Frank Nothaft, chief economist with CoreLogic. “The CoreLogic Home Price Index for the U.S. recorded 5.2 percent growth in the year through June, an important reason that the number of owners with negative equity fell by 850,000 in the second quarter from a year earlier.”

CoreLogic said of the more than 50 million homes with a mortgage, 8.6 million, or 17 percent, have less than 20 percent equity (referred to as under-equitied) and 965,000, or 1.9 percent, have less than 5 percent equity (referred to as near-negative equity).

“We see home prices rising another 5 percent in the coming year based on the latest projected national CoreLogic Home Price Index,” said Anand Nallathambi, president and CEO of CoreLogic. “Assuming this growth is uniform across the U.S., that should release an additional 700,000 homeowners from the scourge of negative equity.”

Other report highlights:
–Nevada had the highest percentage of mortgaged properties in negative equity at 15.3 percent, followed by Florida (14 percent), Maryland (11.8 percent), Illinois (11.7 percent) and Arizona (11.6 percent). These top five states combined accounted for 33.7 percent of negative equity in the U.S., but only 18.6 percent of outstanding mortgages.

–Texas had the highest percentage of homes with positive equity at 98.3 percent, followed by Alaska (98 percent), Colorado (97.8 percent), Hawaii (97.7 percent) and Utah (97.6 percent).

–Of the 10 largest metropolitan areas by population, Miami had the highest percentage of mortgaged properties in negative equity at 18.4 percent, followed by Las Vegas (17.6 percent), Chicago (13.4 percent), Washington, D.C. (9.9 percent) and New York (5.9 percent).

–Of the same 10 largest metropolitan areas, San Francisco had the highest percentage of mortgaged properties in a positive equity position at 99.4 percent, followed by Denver (98.5 percent), Houston (98.4 percent), Los Angeles (96.7 percent) and Boston (95 percent).

–Of the total $284 billion in negative equity, first liens without home equity loans accounted for $159 billion aggregate negative equity, while first liens with home equity loans accounted for $125 billion.

-Among underwater borrowers, 2.2 million hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $252,000, and the average underwater amount is $73,000.

–Nearly 1.4 million of all underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $314,000, and the average underwater amount is $88,000.

–The bulk of positive equity for mortgaged residential properties is concentrated at the high end of the housing market. For example, 96 percent of homes valued at $200,000 or more have equity compared with 89 percent of homes valued at less than $200,000.