Underwater Homeowners Come Up for Air
Although the real estate market is still well below its glory days, rising prices are helping more U.S. homeowners escape underwater mortgages.
The number of Americans who owe more on their mortgage than their home is worth declined by approximately 200,000 residential properties in the fourth quarter of 2012, according to CoreLogic, a leading provider of information and analytics. For the entire year, 1.7 million properties moved from negative to positive equity. As a percentage of all properties with a mortgage, the negative equity rate edged slightly lower from 22 percent in the third quarter of 2012 to 21.5 percent in the fourth quarter.
However, this means 10.4 million properties are still in underwater territory. Negative equity can occur because of a decline in value, an increase in mortgage debt, or a combination of both. At the end of 2012, the national aggregate value of negative equity decreased $42 billion to $628 billion, compared to $670 billion at the end of the third quarter.
“In the fourth quarter we again saw an improvement in the equity position of households,” said Dr. Mark Fleming, chief economist for CoreLogic. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”