Nearly 950,000 U.S. homes returned to positive equity in the second quarter of 2014, bringing the total number of mortgaged residential properties with equity in the U.S. to more than 44 million, according to a new report from real estate data and analytics provider CoreLogic.
Nationwide, borrower equity increased year over year by approximately $1 trillion in Q2 2014. According to CoreLogic, approximately 5.3 million homes, or 10.7 percent of all residential properties with a mortgage, were still underwater as of Q2 2014 compared with 6.3 million homes, or 12.7 percent, for Q1 2014. At this time last year, about 14.9 percent, or 7.2 million homesm were underwater, an improvement of or 4.2 percent
Of the 44 million residential properties with positive equity, approximately 9 million, or 19 percent, have less than 20 percent equity and 1.3 million of those have less than 5 percent. Such borrowers may have difficulty refinancing their homes or obtaining new loans should they wish to move. CoreLogic calculates that a 5 percent rise in home prices would get an additional 1 million homeowners out from underwater.
"The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction," Sam Khater, deputy chief economist for CoreLogic, said in a statement. "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 homeowner."
Nevada had the highest percentage of mortgaged properties in negative equity at 26.3 percent, followed by Florida (24.3 percent), Arizona (19.0 percent), Illinois (15.4 percent) and Rhode Island (14.8). These top five states combined account for 32.8 percent of negative equity in the United States.
The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 94 percent of homes valued at greater than $200,000 have equity compared with 84 percent of homes valued at less than $200,000.
