A new report issued by First American CoreLogic has found that more than 11.3 million homes, or 24% of all residential properties with mortgages, were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23% at the end of the third quarter of 2009.Â
Additionally, another 2.3 million mortgages were approaching negative equity at the end of last year, which gives these residences less than 5% equity. Together, negative-equity and near-negative equity mortgages accounted for nearly 29% of all residential properties with a mortgage during the fourth quarter of 2009. The FirstAmerican CoreLogic study found that negative equity is heavily concentrated in five states: Nevada – where 70% of all of its mortgaged properties have negative equity – followed by Arizona (51%), Florida (48%), Michigan (39%) and California (35%).
The report also found that the aggregate dollar value of negative equity was $801 billion in the fourth quarter of 2009, up $55 billion from $746 billion in the third quarter. The average negative equity for an underwater borrower in the fourth quarter of 2009 was $70,700, up from $69,700 in the third quarter. The segment of borrowers that are 25% or more in negative equity accounted for over $660 billion in aggregate negative equity during the fourth quarter of 2009.
‘Negative equity is a significant drag on both the housing market and on economic growth,’ says Mark Fleming, chief economist with First American CoreLogic. ‘It is driving foreclosures and decreasing mobility for millions of homeowners. Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come.’
SOURCE: First American CoreLogic