More than 790,000 U.S. homeowners returned to positive equity in Q3, according to a new report from real estate data and analytics provider CoreLogic.
Approximately 6.4 million homes, or 13 percent of the market, remain underwater. That number is down 1.7 percent from Q2, when 7.2 million homes were underwater. Year over year, the number of homes with a mortgage that are underwater has dropped by almost one third, from 10.7 million homes, or 22 percent of the market, in Q3 2012.
In Massachusetts, only 10.4 percent of homes with a mortgage were underwater, under the national average. The state was in the middle of the pack for under-equitied homes, with 14.9 percent of homeowners having less than 20 percent equity and 2.3 percent near-negative equity. "Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013. Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion. Negative equity will decline even further in the coming quarters as the housing market continues to improve," Mark Fleming, chief economist for CoreLogic, said in a statement.
CoreLogic cautioned that while the number of homeowners underwater had substantially declined, a large percentage of homeowners have only barely crossed over into positive territory. According to CoreLogic, approximately 48.9 million homes with a mortgage, or 20.4 percent, are "under-equitied," meaning that the homeowners have less than 20 percent equity in the property. Of those, 1.5 million homes, or 3.2 percent, have "near-negative equity" with less than 5 percent equity in their homes, and are at risk of falling underwater again should prices slip. Such borrowers are likely to be ineligible for home equity lines of credit or second mortgages and may find it difficult to refinance.
Equity gains made this year as prices have recovered have been concentrated in the high end of the housing market, the report suggests. According to CoreLogic, 82 percent of homes valued less than $200,000 have equity, while 92 percent of homes valued at more than $200,000 have equity.
