Millions of homeowners returned to a state of positive equity during the second quarter of 2013 as home prices continued their improvement, according to a CoreLogic equity report, although millions more remain underwater.
Approximately 2.5 million more residential properties returned to positive equity status, says the report, putting the total number of mortgaged properties with equity at 41.5 million.
The number of underwater homes decreased from 9.6 million by the end of the first quarter to 7.1 million. That amounts to an aggregate value of $428 billion of negative equity, a decrease of more than $148 billon from the first quarter, which CoreLogic attributes to an improvement in home prices.
“Price appreciation obviously had a positive impact on home equity over the first half of 2013, especially the second quarter,” said Anand Nallathambi, president and CEO of CoreLogic, in a statement. “Despite the substantial decrease in negative equity, there’s more ground left to gain with the 7.1 million U.S. residences that remain underwater.”
More than 10 million residential properties (21.1%) with positive equity remain “under-equitied,” with less than 20% equity, while another 1.7 million had less than 5% equity, referred to as “near negative.”
Properties that are near negative equity are at risk if home prices fall, CoreLogic notes.
“Equity rebuilding continued in the second quarter of this year as the share of underwater mortgaged homes fell to 14.5 percent,” said Dr. Mark Fleming, chief economist for
CoreLogic, of the report. “In just the first half of 2013 almost three and a half million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half.”
Nevada remains atop the list as the state with the highest percentage of mortgaged properties in negative equity, at 36.4%, followed by Florida (31.5%), Arizona (24.7%), Michigan (22.5%), and Georgia (20.7%).
First liens with home equity loans accounted for $211 billion of the total $428 billion in negative equity, or about half. The remaining negative equity is comprised of first liens without home equity loans.
Access the second quarter CoreLogic Equity report.
Written by Alyssa Gerace