850,000 US Homeowners No Longer 'Underwater'

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Rising home prices in the U.S. moved about 850,000 homeowners into positive equity on their homes in the first quarter, according to data released today

About 9.7 million homes, or 19.8 percent of all residential properties with mortgages, are still "underwater" with negative equity, CoreLogic reports. That number is down from 10.5 million, or 21.7 percent of the homes with mortgages, in the fourth quarter of 2012.

Negative equity is when a homeowner owes more on their mortgages than their home is worth.

"The negative equity burden continues to recede across the country thanks largely to rising home prices," said Anand Nallathambi, chief executive of CoreLogic. "We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap."

But the news is not all good. Of the 39 million residential properties with positive equity, 11.2 million have less than 20 percent equity, a situation labeled as "under-equittied," CoreLogic reports. About 2.1 homes have less than 5 percent equity, the firm reports. Under-equittied homes account for 23 percent of all residential property.

"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 Mark Fleming, chief economist for CoreLogic. "During the past year, 1.7 million borrowers have regained positive equity. We expect the pent-up supply that falling negative equity releases will moderate price gains in many of the fast-appreciating markets this spring."

Other highlights from the report:

• Nevada had the highest percentage of mortgaged properties in negative equity at 45.4 percent, followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5 percent). These top five states combined account for 32.8 percent of negative equity in the U.S.

• Of the largest 25 metropolitan areas, Tampa-St. Petersburg-Clearwater, Fla. had the highest percentage of mortgaged properties in negative equity at 41.1 percent, followed by Miami-Miami Beach-Kendall, Fla. (40.7 percent), Atlanta-Sandy Springs-Marietta, Ga. (34.5 percent), Chicago-Joliet-Naperville, Ill. (34.2 percent) and Warren-Troy-Farmington Hills, Mich. (33.6 percent).

• Of the total $580 billion in negative equity, first liens without home equity loans accounted for one-half, or $290 billion aggregate negative equity, while first liens with home equity loans accounted for the remaining half at $290 billion.

• 6.0 million upside-down borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $211,000. The average underwater amount is $48,000.

• 3.7 million upside-down borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $294,000.The average underwater amount is $79,000.

• The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 88 percent of homes valued at greater than $200,000 have equity compared with 73 percent of homes valued at less than $200,000.