CoreLogic: 1.7M Homes Moved into Positive Territory in 2012

CoreLogic: 1.7M Homes Moved into Positive Territory in 2012

03/19/2013 BY: ESTHER CHO

In the fourth quarter of 2012, about 200,000 residential properties transitioned out of a state of negative equity, bringing the 2012 yearly total to 1.7 million properties,CoreLogic reported Tuesday.

According to the data provider, there were still 10.4 million homeowners who were underwater as of the end of Q4; the figure represents 21.5 percent of all residential properties with a mortgage. At the end of Q3, the total stood at 10.6 million properties, or 22 percent of all mortgages.

Out of the 10.4 million properties in negative equity, 1.8 million have a loan-to-value (LTV) ratio between 100 and 105 percent. Thus, these properties need prices to rise by 5 percent to transfer into positive territory.

“In the fourth quarter we again saw an improvement in the equity position of households,” said Dr. Mark Fleming, chief economist for CoreLogic. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”

As home prices rise, the aggregate value of negative equity also saw a quarterly decrease and declined by $42 billion to $628 billion in Q4.

However, 2.3 million residential properties are at risk of tipping into negative territory since they have less than 5 percent of equity. According to data from CoreLogic, the average amount of equity for all properties with a mortgage is 31 percent.

Another 4.4 million properties have LTVs of 125 percent or more, which means these mortgages may be at risk since higher amounts of negative equity are correlated with higher default rates, according to CoreLogic.

The state with the highest percentage of underwater borrowers was Nevada, where 52.4 percent of mortgages are in negative equity. Florida ranked second at 40.2 percent and was followed by Arizona (34.9 percent), Georgia (33.8 percent) and Michigan (31.9 percent). Together, the five states account for 32.7 percent of negative equity in the country, CoreLogic noted.

Among the 25 largest metro areas, two Florida metros, Tampa and Miami, had the highest negative equity share at 44.1 percent and 40.7 percent, respectively. The remaining three metros in the top five were Atlanta (38.1 percent), Phoenix (36.6 percent), and Riverside (35.7 percent).

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