Four Million U.S. Mortgaged Homes Gain Equity

Four Million U.S. Mortgaged Homes Gain Equity

Residential News » North America Residential News Edition | By Francys Vallecillo | March 6, 2014 10:03 AM ET

A total of four million U.S. homes returned to positive equity in 2013, bringing the total number of mortgaged residential properties with equity to 42.7 million, according to a report from CoreLogic. 

Approximately 6.5 million homes, or 13.3 percent of all mortgaged homes, remained in negative equity at the end of 2013. Due to a small slowdown in the home price index growth rate, the negative equity share was little changed from the end of the third quarter. Negative equity -- referred to as "underwater" or "upside down" -- means borrowers owe more than their homes are worth. 

"Only 14 states have a higher negative equity average than the U.S., and more states should experience improvement throughout 2014," said Anand Nallathambi, president and CEO of CoreLogic.

The national aggregate value of negative equity was $398.4 billion for the fourth quarter, compared to $401.3 billion the previous quarter, CoreLogic reports. 

"The plight of the underwater borrower has improved dramatically since negative equity peaked in December 2009 when more than 12 million mortgaged homeowners were underwater," said Mark Fleming, chief economist for CoreLogic. "Over the past four years, more than 5.5 million homeowners have regained equity, reducing their risk of foreclosure and unlocking pent-up supply in the housing market."

A total of 10 million homes have less than 20 percent equity -- referred to as "under-equitied" -- and may have a difficult time obtaining new financing. In 2013, more than 1.6 million homes had less than five percent equity, which is considered near-negative equity and considered at risk if home price fall. 

More from the report:

  • Nevada had the highest percentage of mortgaged properties in negative equity at 30.4 percent, followed by Florida (28.1 percent), Arizona (21.5 percent), Ohio (19.0 percent) and Illinois (18.7 percent). These top five states combined account for 36.9 percent of negative equity in the United States.
  • Of the 25 largest Core Based Statistical Areas (CBSAs) based on population, Orlando-Kissimmee-Sanford, Fla., had the highest percentage of mortgaged properties in negative equity at 31.5 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (30.4 percent), Phoenix-Mesa-Scottsdale, Ariz. (22.1 percent), Chicago-Naperville-Arlington Heights, Ill. (21.4 percent) and Atlanta-Sandy Springs-Roswell, Ga. (19.9 percent).
  • Of the total $398 billion in negative equity, first liens without home equity loans accounted for $205 billion aggregate negative equity, while first liens with home equity loans accounted for $193 billion.
  • Approximately 3.9 million upside-down borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $219,000. The average underwater amount is $52,000.
  • Approximately 2.6 million upside-down borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $293,000.The average underwater amount is $75,000.
  • The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 92 percent of homes valued at greater than $200,000 have equity compared with 81 percent of homes valued at less than $200,000.


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