Previously underwater properties are finally poking their head above the waves as house prices rebound
Rising home prices helped 850,000 borrowers regain equity in their homes during the first quarter of 2013, according to the latest report from real estate analytics provider CoreLogic.
According to the report, 9.7 million properties, or 19.8% of all properties with a mortgage, still had negative equity at the end of the first quarter. That is down from 10.5 million, or 21.7% of all residential properties with a mortgage, at the end of the fourth quarter.
“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity,” said Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity.”
The decline in underwater borrowers might also release pent-up supply and moderate price gains in fast-appreciating markets, according to Fleming. This is of course good news for homebuyers who have been struggling to find homes amid unusually tight supply conditions.
According to the report, Nevada had the highest percentage of mortgaged properties in negative equity at 45%, followed by Florida at 38.1%, Michigan at 32%, Arizona at 31.3% and Georgia at 30.5%. These top five states combined account for 32.8% percent of negative equity in the U.S.
The national aggregate value of negative equity decreased more than $50 billion to $580 billion at the end of the first quarter from $631 billion at the end of the fourth quarter of 2012. This decrease was driven in large part by an improvement in home prices.