In US, 8.3 Million Homeowners to 'Resurface'

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More than 10.7 million homeowners in the U.S. are still "deeply underwater" in their mortgages, but another 8.3 million residential property owners should reach positive equity by 2015, according to the latest data from RealtyTrac.

The number of deeply underwater homeowners - owners who owe at least 25 percent or more on their mortgages than their properties are worth - has been consistently shrinking for the past year. In September 2012 there were 12.5 million homeowners underwater representing 28 percent of all residential properties with mortgages; the current 10.7 million are 23 percent of homeowners with a mortgage.

But the 8.3 million who are listed as either slightly underwater or slightly above water represents a significant segment of the market who will soon be in a position to "resurface" and sell their homes, if they choose.

Homeowners with between 10 percent positive equity and 10 percent negative equity account for 18 percent of all U.S. homeowners with a mortgage as of the beginning of September, the research firm said. 

"Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months," said Daren Blomquist, vice president at RealtyTrac. "Homeowners who already have ample equity are quickly building on that equity, while the 8.3 million homeowners on the fence with little or no equity are on track to regain enough equity to sell before 2015 if home prices continue to increase at the rate of 1.33 percent per month that they have since bottoming out in March 2012."

Nearly one in four homeowners in foreclosure has at least some equity, "giving them a better chance to avoid foreclosure without resorting to a short sale," Mr. Blomquist said.

Other findings from the report:

• More than 126,000 properties in the foreclosure process nationwide had an LTV (loan to value) of 100 percent or lower in September, representing 24 percent of all homes in the foreclosure process. States with the highest percentage of foreclosures with equity included Oklahoma (54 percent), Hawaii (51 percent), New York (47 percent), and Texas (46 percent).

• States with the highest percentage of deeply underwater homes (LTV of 125 percent or higher) included Nevada (46 percent), Illinois (40 percent), Florida (40 percent), Michigan (38 percent), Rhode Island (34 percent), and Ohio (31 percent).

• Metro markets with the highest percentage of homes with resurfacing equity (LTV from 90 to 110 percent) included Omaha, Neb., (29 percent), Colorado Springs, Colo., (29 percent), Tulsa, Okla., (29 percent), Little Rock, Ark., (28 percent), and Raleigh, N.C. (28 percent).

• Nationwide 7.4 million homeowners with a mortgage had 50 percent equity or more, representing 16 percent of all homeowners with a mortgage. Metro markets with the highest percentage of homeowners with at least 50 percent equity included Honolulu (36 percent), San Jose, Calif., (35 percent), Poughkeepsie, N.Y. (30 percent), Pittsburgh (29 percent), San Francisco (29 percent), and New York (27 percent).