Underwater homeowners have been given a tremendous boost by rising home prices over the last 12 months, with more than 1.7 million borrowers regaining equity by the end of 2012. This means that there are now 38.1 million homeowners with equity in the US, according to the latest report from CoreLogic.
Even better is the news that this figure is only set to rise, with around 1.8 million more underwater borrowers expected to get their heads above water should home prices rise by 5% this year – something that most economists have predicted.
Mark Fleming, Chief Economist for CoreLogic, said that the fourth quarter saw a big improvement in many household’s equity position:
“Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market,” explained Fleming.
This may be all well and good, but we shouldn’t forget that there are still millions of homeowners underwater – and many will remain so for some time. According to CoreLogic, 21.5% (about 10.4 million) of all mortgaged properties in the US still have negative equity, a slight improvement on the 22% figure CoreLogic gave last year. Looking closer, it remains clear that it’s the less well-off who are struggling, as the majority of homes with equity tend to be those with more value. 86% of homes valued at $200,000 or above have equity, compared with just 72% of those valued at less than $200,000.
As expected, the vast majority of underwater homeowners can be found in the states of Nevada (52.4% of all mortgages), Florida (40.2%), Arizona (34.9%), Georgia (33.8%) and Michigan (31.9%). All together, these ‘top five’ underwater states account for just under a third of all homes with negative equity in the country.
For more information on the state of mortgage equity, read CoreLogic’s full report here.