Buoyed by rising home prices, about 2.5 million residential properties returned to a state of positive equity during the second quarter, according to CoreLogic's Q2 2013 Equity Report.
About 7.1 million homes, or 14.5% of all residential properties with a mortgage, were in negative equity at the end of the second quarter, according to the report. This figure is down from 9.6 million homes, or 19.7% of all residential properties with a mortgage, at the end of the first quarter of 2013.
Negative equity among all underwater homeowners with a mortgage totaled $428 billion at the end of the second quarter, compared to $576 billion at the end of the first quarter of 2013, a decrease of more than $148 billion.
The total number of mortgaged residential properties with equity stood at 41.5 million. Of those, about 10.3 million had less than 20% equity. These ‘under-equitied’ homeowners may have a more difficult time obtaining new financing due to underwriting constraints, CoreLogic notes. Under-equitied mortgages accounted for 21.1% of all residential properties with a mortgage nationwide.
Of the 10.3 million homes with less than 20% equity, about 1.7 million had less than 5% equity, referred to as near-negative equity. CoreLogic notes that these properties are at risk of returning to negative equity should home prices fall.
‘Equity rebuilding continued in the second quarter of this year as the share of underwater mortgaged homes fell to 14.5 percent,’ says Dr. Mark Fleming, chief economist for CoreLogic. ‘In just the first half of 2013, almost three-and-a-half million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half.’
States with the highest percentage of mortgaged properties in negative equity in the second quarter included Nevada (36.4%), Florida (31.5%), Arizona (24.7%), Michigan (22.5%) and Georgia (20.7%). These top five states combined account for 34.9% of negative equity in the U.S.
Metropolitan areas with the highest percentage of mortgaged properties in negative equity in the second quarter included Miami-Miami Beach-Kendall, Fla. (36.5%); Tampa-St. Petersburg-Clearwater, Fla. (33.8%); Phoenix-Mesa-Glendale, Ariz. (25.6%); Riverside-San Bernardino-Ontario, Calif. (24.8%); and Warren-Troy-Farmington Hills, Mich. (24.3%).
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