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Negative equity, often referred to as "underwater" or "upside down," means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
For the homes in negative equity status, the national aggregate value of negative equity was
Of the 43 million residential properties with equity, approximately 10 million have less than 20-percent equity. Borrowers with less than 20-percent equity, referred to as "under-equitied," may have a more difficult time refinancing their existing home or obtaining new financing to sell and buy another home due to underwriting constraints. Under-equitied mortgages accounted for 20.6 percent of all residential properties with a mortgage nationwide in Q1 2014, with more than 1.5 million residential properties at less than 5-percent equity, referred to as near-negative equity. Properties that are near-negative equity are considered at risk if home prices fall.
"Despite the massive improvement in prices and reduction in negative equity over the last few years, many borrowers still lack sufficient equity to move and purchase a home," said
"Prices continue to rise across most of the country and significantly fewer borrowers are underwater today compared to last year," said
Highlights as of Q1 2014:
Nevadahad the highest percentage of mortgaged properties in negative equity at 29.4 percent, followed by Florida(26.9 percent), Mississippi(20.1 percent), Arizona(20.1 percent) and Illinois(19.7 percent). These top five states combined account for 31.1 percent of negative equity in the United States.
- Of the 25 largest Core Based Statistical Areas (CBSAs) based on population,
Tampa- St. Petersburg-Clearwater, Fla., had the highest percentage of mortgaged properties in negative equity at 29.5 percent, followed by Chicago-Naperville-Arlington Heights, Ill. (22.4 percent), Phoenix- Mesa- Scottsdale, Ariz.(20.6 percent), Atlanta- Sandy Springs- Roswell, Ga.(19.5 percent) and Warren-Troy-Farmington Hills, Mich. (18.3 percent).
- Of the total
$384 billionin negative equity, first liens without home equity loans accounted for $200 billionaggregate negative equity, while first liens with home equity loans accounted for $184 billion.
- Approximately 3.8 million underwater borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is
$218,000. The average underwater amount is $52,000.
- Approximately 2.5 million underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is
$290,000. The average underwater amount is $75,000. Texashad the highest percentage of mortgaged residential properties in an equity position at 96.7 percent, followed by Montana(96.3 percent), Alaska(95.7 percent), North Dakota(95.7 percent) and Hawaii(95.6 percent).
- Of the largest 25 Core Based Statistical Areas (CBSAs) based on population,
Houston- The Woodlands- Sugar Land, Texashad the highest percentage of mortgaged properties in an equity position at 97.0 percent; followed by Dallas- Plano- Irving, Texas(96.2 percent); Anaheim- Santa Ana- Irvine, Calif.(95.6 percent); Portland- Vancouver- Hillsboro, Ore.(94.8 percent) and Seattle- Bellevue- Everett, Wash.(93.7 percent).
- Nationally, the number of homes with equity had a default rate of 0.6 percent, the same as in the previous quarter. However, homes with negative equity had a default rate of 3.5 percent as of Q1 2014, down from 3.7 percent in Q4 2013.
- The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 93 percent of homes valued at greater than
$200,000have equity compared with 82 percent of homes valued at less than $200,000.
*Fourth quarter 2013 data was revised. Revisions with public records data are standard, and to ensure accuracy,
*This data only includes properties with a mortgage. Non-mortgaged properties are by definition not included.
** Defined as properties within 5 percent of being in a negative equity position.
The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography.
The data provided is for use only by the primary recipient or the primary recipient's publication or broadcast. This data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient's parent company without prior written permission from