17 Percent of U.S. Homes Seriously Underwater, Down From 26 Percent a Year Ago;
34 Percent of Residential Properties in Foreclosure Process with Positive Equity;
8.8 Million Properties with Emerging Equity
IRVINE, Calif. — July 24, 2014 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its U.S. Home Equity & Underwater Report for the second quarter of 2014, which shows that 9.1 million U.S. residential properties were seriously underwater — where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value — representing 17 percent of all properties with a mortgage.
The second quarter of 2014 saw a small percentage decrease in homes that were seriously underwater, 17.2 percent versus 17.4 percent in the first quarter of 2014, bringing it to the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012. The recent peak in negative equity was the second quarter of 2012, when 12.8 million U.S. residential properties representing 29 percent of all properties with a mortgage were seriously underwater.
The universe of equity-rich properties — those with at least 50 percent equity — held steady from the first quarter at 9.9 million in the second quarter of 2014, representing 18.8 percent of all properties with a mortgage.
Another 8.8 million properties were on the verge of resurfacing in the second quarter of 2014, with between 10 percent negative equity and 10 percent positive equity, representing 17 percent of all properties with a mortgage, up from 8.5 million representing 16 percent of all properties with a mortgage in the first quarter of 2014.
Fewer distressed properties had negative equity in the second quarter, with 44 percent of all properties in the foreclosure process seriously underwater — down from 45 percent in the first quarter of 2014 and down from 57 percent in the second quarter of 2013. The share of foreclosures with positive equity decreased to 34 percent in the second quarter, down from 35 percent in the first quarter. Top states for foreclosures with equity include Colorado, Texas, Oklahoma, Hawaii and Louisiana.
“Home price appreciation has slowed in the last few months in many of the markets with the most underwater homes, slowing the pace at which homeowners are recovering equity lost during the Great Recession,” said Daren Blomquist, vice president at RealtyTrac. “For instance home price appreciation in California was at 16 percent in May 2014 compared to a high of 31 percent in July and August of 2013. In Arizona, home price appreciation has slowed to 6 percent annually compared to a high of 24 percent last year.
“In addition many of the properties that are seriously underwater are in a deep negative equity hole that will take some time to dig out of,” Blomquist continued. “The average loan-to-value on the 9.1 million homes seriously underwater was 133 percent, and the average loan-to-value on the homes in foreclosure that are seriously underwater was 134 percent.”
Markets with the most negative equity
States with the highest percentage of residential properties seriously underwater in the second quarter were Nevada (32 percent), Florida (30 percent), Illinois (30 percent), Rhode Island (29 percent) and Michigan (27 percent).
Major metropolitan statistical areas (population 500,000 or more) with the highest percentage of residential properties seriously underwater were Lakeland, Fla (37 percent), Las Vegas (35 percent), Cleveland (35 percent), Palm Bay-Melbourne-Titusville, Fla (32 percent), Chicago (30 percent), Cape Coral-Fort Meyers, Fla (30 percent), and New Haven-Milford, CT (30 percent).
Markets with the most resurfacing equity
Major metro areas with the highest percentage of resurfacing equity - between negative 10 percent and positive 10 percent – were Colorado Springs, Colo., (28 percent), Albuquerque NM (22 percent), Lancaster, PA (22 percent), El Paso, TX (22 percent), Salt Lake City (22 percent) and Worcester, MA (22 percent).
Markets with the most equity-rich properties
Major metro areas with the highest percentage of equity rich properties - those with at least 50 percent equity - were San Francisco (37 percent), Honolulu (36 percent), Los Angeles (32 percent), New York (29 percent), Oxnard (28 percent), and San Diego (28 percent).
The RealtyTrac U.S. Home Equity & Underwater report provides counts of residential properties based on several categories of equity — or loan to value (LTV) — at the state, metro and county level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data, and is also matched against record-level foreclosure data to determine foreclosure status for each equity/LTV category.
Seriously Underwater: Loan to value ratio of 125 percent or above, meaning the homeowner owed at least 25 percent more than the estimated market value of the property.
Equity Rich: Loan to value ratio of 50 percent or lower, meaning the homeowner had at least 50 percent equity.
Foreclosures w/Equity: Properties in some stage of the foreclosure process (default or scheduled for auction, not including bank-owned) where the loan to value ratio was 100 percent or lower.
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.
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RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 127 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.
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