Dennis Norman
According to a report released by CoreLogic, there were 11.2 million homeowners that were in a negative equity, or “underwater“, position on their mortgages as of the end of the first quarter of this year. This number is equal to 24 percent of all homeowners with a mortgage in the U.S., which is the same percentage as the prior quarter, however the actual number of underwater borrowers was down slightly from 11.3 million borrowers that were underwater in the prior quarter. In addition, there are an additional 2.3 million borrowers that have less than five percent equity in their homes, bring the total of negative equity and near-negative borrowers to over 28 percent of all homeowners with a mortgage nationwide.
A serious decrease in the percentage of mortgages underwater would be better news, but this news is still positive as it shows the rate of borrowers going underwater has stalled out and hopefully we have seen the worst of it.
Highlights of the report:
- Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (34 percent).
- In terms of metro areas Las Vegas continues to have the highest percentage of negative equity with 75% of mortgaged properties being underwater, followed by Stockton (65%), Modesto (62%), Vallejo-Fairfield (60%) and Phoenix (58%).
- Phoenix had more than 550,000 underwater borrowers, the most households of any metropolitan market in the country. Riverside (463,000), Los Angeles (406,000) Atlanta (399,000) and Chicago (365,000) round out the top five markets.
The share of borrowers whose mortgage debt exceeds the property value by 25% or more fell slightly to 10.4% or 4.9 million borrowers, down from 10.6% or 5 million borrowers.
The two most important triggers of default, negative equity and unemployment, have stabilized over the last six months. As house prices grow again and borrowers pay down their mortgage debt negative equity levels will begin to diminish. The typical underwater borrower is likely to regain their lost equity over the next five to seven years,” said Mark Fleming, chief economist with CoreLogic.
Source: CoreLogic
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