CoreLogic, a provider of information, analytics and business services, released new analysis showing approximately 200,000 more residential properties returned to a state of positive equity during the fourth quarter of 2012. This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million and the number of mortgaged residential properties with equity to 38.1 million.
The analysis also shows that 10.4 million, or 21.5 percent of all residential properties with a mortgage, were still in negative equity at the end of the fourth quarter of 2012. This figure is down from 10.6 million properties, or 22 percent, at the end of the third quarter of 2012.
The national aggregate value of negative equity decreased $42 billion to $628 billion at the end of the fourth quarter from $670 billion at the end of the third quarter in 2012. This decrease was driven in large part by an improvement in home prices.
Of the 38.1 million residential properties with positive equity, 11.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. At the end of the fourth quarter, 2.3 million residential properties had less than 5 percent equity, referred to as near-negative equity. Properties that are near negative equity are at risk should home prices fall. Under-equitied mortgages accounted for 23.2 percent of all residential properties with a mortgage nationwide in the fourth quarter of 2012. The average amount of equity for all properties with a mortgage is 31 percent.
“In the fourth quarter, we again saw an improvement in the equity position of households,” said Mark Fleming, chief economist for CoreLogic. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”
Highlights as of Q4 2012:
- Nevada had the highest percentage of mortgaged properties in negative equity at 52.4 percent, followed by Florida (40.2 percent), Arizona (34.9 percent), Georgia (33.8 percent) and Michigan (31.9 percent). These top five states combined account for 32.7 percent of negative equity in the United States.
- Of the total $628 billion in negative equity, first liens without home equity loans accounted for $313 billion aggregate negative equity, while first liens with home equity loans accounted for $315 billion.
- 6.5 million upside-down borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $213,000. The average underwater amount is $45,000.
- 3.9 million upside-down borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $296,000.The average underwater amount is $80,000.
- The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 86 percent of homes valued at greater than $200,000 have equity compared with 72 percent of homes valued at less than $200,000.