2.8 million homes still in negative equity

Despite a sharp fall in the number of US homes with a mortgage in negative equity, 2.8 million are still underwater

2.8 million homes still in negative equity
Despite a sharp fall in the number of US homes with a mortgage in negative equity, 2.8 million are still underwater.

Data from CoreLogic shows that the number of underwater homes fell 22% year-over-year in the second quarter of 2017 with a 10% drop since the first quarter of 2017.

Meanwhile homeowners with mortgages (around 63% of all homeowners) saw their equity increase by a total of 10.6% year over year with an average gain of almost $13,000. That means a total of $766 billion added to the value of mortgaged homes.

“Over the last 12 months, approximately 750,000 borrowers achieved positive equity,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This means that mortgage risk continues to decline and, given the continued strength in home prices, CoreLogic expects home equity to rise steadily over the next year.”

Those in Western states gained the most equity with those owners in Washington adding $40,000 and Californians gaining $30,000.

The figures show that a 5% rise in home prices would mean a further 500,000 homes with a mortgage regaining equity.

“Homeowner equity reached $8 trillion in the second quarter of 2017, which is more than double the level just five years ago,” said Frank Martell, president and CEO of CoreLogic. “The rapid rise in homeowner equity not only reduces mortgage risk, but also supports consumer spending and economic growth.”

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