Home Equity Growth Stalled in Fourth Quarter

An additional 4 million homes regained positive equity in 2013rnCoreLogic said today, leaving 6.5 million homes still underwater; about halfrnthe number that were in that position at the end of 2009.  Homes still in a negative equity positionrnconstitute 13.3 percent of all residential properties with a mortgage whilern42.7 million homeowners now have at least some equity.</p

While the negative equity problem has been slowly resolving CoreLogicrnsaid that the percentage of homes underwater was virtually unchanged from thernend of the third quarter.  This is due torna slowdown in the quarterly growth rate of CoreLogic’s Home Price Index (HPI.) </p

While homeowners are seeing the net worth of their homes increase, manyrnof the margins are still narrow.  CoreLogicrnsays that about 10 million of the homes in positive equity have less than 20rnpercent and may have a difficult time refinancing their homes.  These “under-equitied” properties accountedrnfor 21.1 percent of mortgaged homes nationwide. rnMore than 1.6 million properties are referred to as “near-negativernequity,” that is having less than 5 percent equity and these remain in dangerrnof slipping back underwater if home prices decline.  </p

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“The plight of the underwater borrower has improved dramatically since negativernequity peaked in December 2009 when more than 12 million mortgaged homeownersrnwere underwater,” said Mark Fleming, chief economist for CoreLogic. “Over the pastrnfour years, more than 5.5 million homeowners have regained equity, reducing theirrnrisk of foreclosure and unlocking pent-up supply in the housing market.”</p

The national aggregate value of negative equity was $398.4 billion forrnfourth quarter 2013, compared to $401.3 billion for third quarter 2013, arndecrease of $2.9 billion. Homes with only one mortgage account for slightlyrnmore than half of the $398 billion – $205 billion – and about two-third ofrnunderwater homeowners, 3.9 million.  Thern2.6 million properties with both a first mortgage and a home equity loanrnaccount for $193 billion. Homes with one mortgage were underwater an average ofrn$52,000 while homes with two mortgages had an average of $75,000 in negativernequity</p

Nevada continues to have the highest percentage of underwater homes atrn30.4 percent.  In Florida 28.1 percent ofrnmortgaged homes lack equity and in Arizona 21.5 percent, followed by Ohio (19.0rnpercent), and Illinois (18.7 percent.) rnThese five states combine to account for 36.9 percent of all negativernequity in the country.  Four of the fivernlarge metropolitan areas with the highest levels of negative equity are inrnthese states, two in Florida (Orlando-Kissimmee and Tampa-St. Petersburg-Clearwater)rnand one each in Arizona (Phoenix) and Illinois (Chicago).  Atlanta rounds out the top five.   </p

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The bulk of home equity for mortgaged properties is concentrated at thernhigh end of the housing market. For example, 92 percent of homes valued atrngreater than $200,000 have equity compared with 81 percent of homes valued atrnless than $200,000.</p

“Stability and growth in the housing market are essential for a durablernrecovery of the U.S. economy,” said Anand Nallathambi, president and CEO ofrnCoreLogic. “The rebound in home prices in 2013 helped 4 million property ownersrnregain at least some positive equity in their largest asset-their home. Wernstill have a long way to go to eliminate the negative equity overhang butrnsignificant progress is being made every day across most of the country.”

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