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Negative Equity Levels Continue to Shrink

Phil Hall
Sep 15, 2016
There is good news and bad news mixed with good news in CoreLogic’s latest homeowner equity report

There is good news and bad news mixed with good news in CoreLogic’s latest homeowner equity report.

First, the good news: 548,000 homeowners regained equity in the second quarter compared with the previous quarter. As a result, 92.9 percent of all mortgaged properties, or approximately 47.2 million homes, have equity. Even better: Home equity grew year-over-year during the second quarter.

Now, the bad news: the total number of mortgaged residential properties with negative equity stood at 3.6 million, or 7.1 percent of all mortgaged residences. However, this bad news had some aspects of good news laced within: the second quarter negative equity level is 13.2 percent lower than the first quarter and 19 percent lower than the second quarter 2015 level. For homes in negative equity status, the national aggregate value of negative equity was $284 billion at the end of the second quarter, a 6.7 percent decline from the first quarter and a 9.5 percent year-for-year slide.

The five states with the highest percentage of negative equity—Nevada (15.3 percent), Florida (14 percent), Maryland (11.8 percent), Illinois (11.7 percent) and Arizona (11.6 percent)—accounted for one-third of all negative equity. Among metro areas, Florida’s Miami-Miami Beach-Kendall corridor had the highest percentage of mortgaged properties in negative equity at 18.4 percent.

"We see home prices rising another five percent in the coming year based on the latest projected national CoreLogic Home Price Index," said Anand Nallathambi, president and CEO of CoreLogic. "Assuming this growth is uniform across the U.S., that should release an additional 700,000 homeowners from the scourge of negative equity."

As for homeowners struggling with negative equity or worse, there is still help available: HOPE NOW reported there were 112,000 non-foreclosure solutions in July versus 25,000 completed foreclosure sales. Included in that total solutions figure were an estimated 35,000 permanent loan modifications.

“While the data trends certainly suggest that the market is recovering, there remains areas where assistance is still needed. HOPE NOW continues to focus our efforts in several of these regions including Florida, Georgia, New Jersey and California,” said Erik Selk, executive director at HOPE NOW.

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