Last week, RealtyTrac announced its findings that some 600,000 homeowners had emerged from being “deeply underwater” (that is, with loan-to-value ratios in excess of 125%) since May. During that same time, CoreLogic also that homeowners are rapidly recapturing the equity they lost suddenly late in the last decade. Currently, more than 2.5 million more residential properties became equity-positive during the second quarter of 2013.
The CoreLogic report put the number of mortgaged residential properties with equity at 41.5 million and the number still underwater at 7.1 million or 14.5% of all homes with a mortgage. At the end of the previous quarter, there were 9.6 million homes or 19.7% that were underwater. Of those properties with positive equity, CoreLogic says 10.3 million or 21.1% have less than 20% equity, meaning their owners may have difficulty refinancing or selling their homes due to underwriting constraints. Of these, 1.7 million properties had less than 5% equity and are at risk of being in negative territory again with even a slight decline in home prices.
Negative equity was highest in Nevada (36.4%), Florida (31.5%), Arizona (24.7%), Michigan (22.5%), and Georgia (20.7%). These top five states combined account for 34.9 percent of negative equity in the U.S.
CoreLogic believes the number of homeowners with negative equity will continue to decline, but not at the same pace as it did in the first half of 2013, as home prices begin to stabilize in the next six months.