Rising prices lift 1.4 million homeowners out of negative equity

Source: Housingwire
By Kerri Ann Panchuk

Rising home prices pulled more than 100,000 homeowners out of negative equity in the third quarter of 2012, bringing the total number of borrowers rebounding from 'upside-down status' to 1.4 million through the first three quarters of the year, CoreLogic said. By the second quarter of 2012, 1.3 million borrowers had reached positive-equity status. And by the third quarter, 10.7 million, or 22% of all residential properties with a mortgage, remained in negative equity, down from 10.8 million properties in the second quarter. An additional 2.3 million borrowers remain at-risk of falling into negative equity, with those homeowners maintaining less than 5% equity in their homes, CoreLogic added. Altogether negative equity and near-negative equity borrowers represent 26.8% of all U.S. residential properties with a mortgage today. Negative equity fell from $689 billion at the end of 2Q2012 to $658 billion in the third quarter. CoreLogic attributes this $31-billion quarterly decline to improving home prices. "Through the third quarter, the number of underwater borrowers declined significantly," said Mark Fleming, chief economist for CoreLogic. "The substantive gain in house prices made in 2012, partly due to tight inventory caused by negative equity's lock-out effect, has paradoxically alleviated some of the pain." The states with the largest percentage of homes in negative equity from most to least included Nevada, with 56.9% of properties upside down; Florida (42.1% in negative equity); Arizona (38.6%); Georgia (35.6%) and Michigan (32%). The average underwater amount is $49,000. The majority of homes in negative equity are lower-priced properties. Homes valued for less than $200,000 represented 28.7% of all properties in negative equity. Comparatively, only 14.6% of upside-down homes have values above $200,000.

URL to original article: http://www.housingwire.com/news/2013/01/17/rising-prices-lift-14-million-homeowners-out-negative-equity

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