Fewer U.S. homes underwater as prices rise
More than 1.3 million U.S. homeowners who owed more on their mortgages than their homes were worth have regained equity this year, Santa Ana-based data firm CoreLogic says.
Increases in home values are giving homeowners not only more equity but the ability to refinance. Nationwide, home values saw the biggest annual gain in almost six years, according to a CoreLogic index released earlier this month.
About 600,000 underwater borrowers hit positive equity in the second quarter, according to the report. That followed more than 700,000 in the first three months of the 2012.
Some 22.3 percent of homeowners with a mortgage had negative equity at the end of June, down from 23.7 percent three months earlier.
“Prices are snapping back quickly and it’s having a material impact on reducing negative equity,” Sam Khater, CoreLogic’s senior economist, said in a telephone interview. “Equity comprises the largest component of homeowner wealth, and their wealth is finally rising.”
Almost 2 million more borrowers with negative equity would be above water if home prices nationally increased by 5 percent, Anand Nallathambi, president and CEO of CoreLogic, said in today’s statement.
“Surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity,” said Mark Fleming, chief economist for CoreLogic.
Nallathambi sees more progress ahead: “We currently expect home prices to continue to trend up in August,” he said. “Were this trend to be sustained we could see significant reductions in the number of borrowers in negative equity by next year.”
In Orange County, 18.2 percent, or 100,670, of homes with mortgages were underwater as of the second quarter 2012 compared to 19 percent, or 105,251 residences, in the first quarter of 2012. The percentage and number of homes in “near negative equity” remained roughly the same — 3.9 percent. Near negative equity is defined as having less than 5 percent equity in the home.
The report also showed…
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