CoreLogic had some good news for the economy in its latest equity report, revealing that just over 548,000 homeowners regained equity in the last quarter. As a result, the percentage of American homes that now have positive equity stood at 92.9 percent at the end of the second quarter.
The report shows that home equity has risen by $646 billion year-over-year, or 9.9 percent compared to the same quarter one year ago. The states of Texas (98.3 percent), Alaska (98 percent), Colorado (97.8 percent), Hawaii (97.7 percent and Utah (97.6 percent) lead the way with the highest percentage of homes with positive equity.
“Home value gains have played a large part in restoring home equity,” said Frank Nothaft, CoreLogic’s chief economist.
CoreLogic president and CEO Anand Nallathambi said that home prices will likely rise by five percent in the next 12 months, which means an additional 700,000 homeowner will emerge with positive equity. And those who already have positive equity will be able to cement their position further, Nallathambi said. Currently, around 8.6 million homes in the U.S. (around 17 percent) have less than 20 percent equity, which industry experts refer to as being “under-equitied”. Another 1.9 percent of homes (around 965,000) have less than five percent equity, which means they’re considered to have “near-negative equity”.
“Borrowers who are under-equitied may have a difficult time refinancing their existing homes or obtaining new financing to sell and buy another home due to underwriting constraints,” the CoreLogic report noted. “Borrowers with near-negative equity are considered at risk of shifting into negative equity if home prices fall.”
That would see them join the 3.6 million properties in the U.S. (7.1 percent of all mortgaged homes) that are currently in a negative equity position – which means borrowers owe more on their homes than what it’s currently valued at. This figure has dropped from 13.2 percent of all homes in negative equity in the first quarter, and by 19 percent from the same quarter one year ago.
Nevada remains the hardest-hit state with some 15.3 percent of homes in negative equity, followed by Florida (14 percent), Maryland (11.8 percent), Illinois (11.7 percent) and Arizona (11.6 percent).