CoreLogic: Number Of Underwater Homes Keeps Shrinking As Prices Rise


A rising tide lifts all boats – well, at least more boats, anyway, if you’re talking about home equity and rising home prices.

About 268,000 homeowners who were underwater on their mortgages regained equity in the first quarter, bringing the total number of mortgaged residential properties with equity to approximately 46.7 million, or 92% of all mortgaged properties, according to CoreLogic.

The increase is due mainly to rising home prices, which were up 6.2% year over year in April, according to the firm’s data.

Nationwide, home equity increased by $762 billion in the first quarter compared with the first quarter of 2015.

Still, about 4 million U.S. residential properties remain in negative equity. That’s about 8% of all homes with a mortgage.

This is a decrease of 6.2% compared with 4.3 million homes – or 8.5% of all homes with a mortgage – in the fourth quarter of 2015. What’s more, it is a decrease of 21.5% compared with 5.1 million homes – or 10.3% of all homes with a mortgage – in the first quarter of 2015.

For the homes in negative equity status, the national aggregate value of negative equity was about $299.5 billion, as of the end of the first quarter. That’s a decrease of about $11.8 billion, or 3.8%, from $311.3 billion in the fourth quarter. It’s also a decrease of 11.8% compared with $340 billion in the first quarter of 2015.

Of the more than 50 million homes with a mortgage, approximately 9.1 million, or 18%, have less than 20% equity (referred to as “under-equitied”), and 1.1 million, or 2.2%, have less than 5% equity (referred to as near-negative equity).

“In just the last four years, equity for homeowners with a mortgage has nearly doubled to $6.9 trillion,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment. These are all positive factors that will provide support to both household balance sheets and the overall economy.”

“More than 1 million homeowners have escaped the negative equity trap over the past year. We expect this positive trend to continue over the balance of 2016 and into next year as home prices continue to rise,” adds Anand Nallathambi, president and CEO of CoreLogic. “Nationally, the CoreLogic Home Price Index was up 5.5 percent year over year through the first quarter. If home values rise another five percent uniformly across the U.S., the number of underwater borrowers will fall by another 1 million during the next year.”

For more, including a breakdown of which states and cities have the most underwater homes, click here.

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