$1 Trillion in Equity Gained as of Second Quarter

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photo credit: Thomas Galvez

Almost a Million Homes

CoreLogic’s Equity Report identified that the second quarter saw almost 950,000 homes go into the positive equity category, representing a gain of $1 trillion which brings the total number of positive equity homes to more than 44 million.

Sam Khater, Deputy Chief Economist for CoreLogic says, “The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction. Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical home owner.”

However, home prices need to rise to help boost home-owner confidence while in their positive equity position. 9 million or 19 percent of the 44 million homes with positive equity have less than 20 percent equity. CoreLogic calls this “under-equitied” and the 1.3 million homes with less than 5 percent are labeled “near-negative equity”.

As of the second quarter, 10.7 percent or about 5.3 million of all residential properties with a mortgage remained in negative equity. The Equity Report also mentions that ‘under-equitied’ borrowers may have difficulties with refinancing their existing homes or getting new financing to because of necessary underwriting constraints.

How important are home prices rising in helping to gain equity? If there’s just a 5 percent price rise, an additional 1 million home-owners that currently have negative equity could regain equity according to CoreLogic’s analysis.

“Many home owners across the country are seeing the equity value in their homes grow, which lifts the economy as a whole,” says Anand Nallathambi, President and CEO of CoreLogic. “With more and more borrowers regaining equity, we expect home ownership to become an increasingly attractive option for many who have remained on the sidelines in the aftermath of the Great Recession. This should provide more opportunities for people to sell their homes, purchase a different home or refinance an existing mortgage.”

States with highest percentage of properties with a mortgage in positive equity as of the second quarter:

Texas: 97.3%
Alaska: 96.5%
Montana: 96.4%
North Dakota: 96%
Hawaii: 96%

Metro areas with highest percentage of properties with a mortgage in negative equity as of the second quarter:

Houston-The Woodlands-Sugar Land, TX: 97.5%
Dallas-Plano-Irving, TX: 97%

States with highest percentage of properties with a mortgage in negative equity as of the second quarter:

Nevada: 26.3%
Florida: 24.3%
Arizona: 19%
Illinois: 15.4%
Rhode Island: 14.8%

Metro areas with highest percentage of properties with a mortgage in negative equity as of the second quarter:

Tampa-St. Petersburg-Clearwater, FL: 26.2%
Phoenix-Mesa-Scottsdale, AZ: 19.5%

Resources:

CoreLogic. CoreLogic Reports 946,000 Residential Properties Regained 1 Trillion Dollars in Total Equity in Q2 2014

National Association of Realtors. Nearly 1 Million Homes Regain Equity

Written by: Ari Meier

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