9.3 Million U.S. Residential Properties Deeply Underwater in December 2013, Down From 10.7 Million in September 2013

Also Down From
10.9 Million in January 2013 and Peak of 12.8 Million in May
2012

31 Percent of Residential Properties in
Foreclosure Process Now Have Some Equity

IRVINE, Calif. — Jan. 9, 2014 —
RealtyTrac® (www.realtytrac.com), the
nation’s leading source for comprehensive housing data, today released its U.S.
Home Equity & Underwater Report for December 2013, which shows that 9.3
million U.S. residential properties were deeply underwater — where the combined
loan amount secured by the property is at least 25 percent higher than the
property’s estimated market value — representing 19 percent of all properties
with a mortgage in December.

That was down from 10.7 million
residential properties deeply underwater in September 2013, representing 23
percent of all properties with a mortgage, and down from 10.9 million
properties deeply underwater in January 2013, representing 26 percent of all
properties with a mortgage. The recent peak in negative equity was May 2012,
when 12.8 million U.S. residential properties were deeply underwater,
representing 29 percent of all properties with a mortgage.

Fewer
foreclosures were deeply underwater in December compared to three months
earlier. A total of 239,470 residential properties actively in the foreclosure
process were worth at least 25 percent less than the combined loans secured by
the property, representing 48 percent of all properties in foreclosure. That
was 60,000 fewer than in September, when there were 299,773 foreclosure
properties deeply underwater, representing 56 percent of all properties in the
foreclosure process. Meanwhile, 31 percent of all residential properties in the
foreclosure process had some positive equity, up from 24 percent with equity in
September.

The universe of equity-rich properties — with at
least 50 percent equity — grew during the fourth quarter as well, from 7.4
million representing 16 percent of all residential properties with a mortgage
in September, to 9.1 million representing 18 percent of all residential
properties with a mortgage in December.

“During the housing
downturn we saw a downward spiral of falling home prices resulting in rising
negative equity, which in turn put millions of homeowners at higher risk for
foreclosure when they encountered a trigger event such as job loss,” said Daren
Blomquist, vice president at RealtyTrac. “Now we are seeing the reverse trend:
rising home prices resulting in falling negative equity, which in turn is
giving millions of homeowners a lifeline to avoid foreclosure when they
encounter a trigger event. On the other end of the spectrum, the percentage of
equity-rich homeowners is nearing a tipping point that should result in a
larger inventory of homes listed for sale and give the overall economy a nice
shot in the arm in 2014.

“However, there are still millions
of homeowners who are in such a deep equity hole that it will take years for
them to regain their equity,” Blomquist added. “The longer these homeowners
remain in a negative equity position without relief in the form of a principal
loan balance reduction, the more likely that foreclosure will become the path
of least resistance for them.”

“With available home inventory
and interest rates at all-time lows, we experienced an increased rate of
appreciation throughout the Ohio housing market during the fourth quarter of
2013,” said Michael Mahon, executive vice president/broker at HER
Realtors
, covering the Cincinnati, Columbus and Dayton
markets in Ohio.  “As we enter 2014, we are expecting
the rate of appreciation to outpace what we have experienced the past two
years, which will provide consumers the added value and reason to enter the
home market in 2014.”

Other
high-level findings from the
report:

  • States with the highest
    percentage of residential properties deeply underwater in December were Nevada
    (38 percent), Florida (34 percent), Illinois (32 percent), Michigan (31
    percent), Missouri (28 percent), and Ohio (28 percent).
  • Major metropolitan
    statistical areas with the highest percentage of residential properties deeply
    underwater in December were Las Vegas (41 percent), Orlando, Fla., (36
    percent), Detroit (35 percent), Tampa, Fla., (35 percent), Miami (33 percent),
    and Chicago (33 percent).
  • States with
    the highest percentage of equity-rich residential properties were Hawaii (36
    percent), New York (33 percent), California (26 percent), Montana (24 percent),
    and Maine (24 percent). The District of Columbia also posted an equity-rich
    rate of 24 percent.
  • Major
    metropolitan statistical areas with the highest percentage of equity-rich
    residential properties were San Jose, Calif., (37 percent), San Francisco (33
    percent), Pittsburgh (30 percent), Buffalo, N.Y. (30 percent), and Los Angeles
    (29 percent).
  • States with the highest
    percentage of deeply underwater residential properties in the foreclosure
    process included Nevada (65 percent), Florida (61 percent), Illinois (61
    percent), Michigan (55 percent), and Ohio (48 percent).
  • Major metro areas with the
    highest percentage of deeply underwater residential properties in the
    foreclosure process were Las Vegas (66 percent), Tampa, Fla. (63 percent),
    Chicago (62 percent), Orlando (61 percent), and Detroit (61
    percent).
  • States with the highest
    percentage of foreclosure properties with some equity included Oklahoma (62
    percent), Colorado (54 percent), New York (52 percent), Texas (51 percent) and
    North Carolina (45 percent).
  • Major metro areas with the
    highest percentage of foreclosure properties with some equity were Buffalo,
    N.Y. (74 percent), Pittsburgh (73 percent), Austin (67 percent), Denver (64
    percent), and Oklahoma City (63 percent).
Home Equity Profiles: 50 Largest Metros

Report
methodology

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.

Definitions
Deeply
underwater: L
oan to value ratio of 125 percent or above, meaning the
homeowner owe 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.

Report License

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.

Data
Licensing and Custom Report Order

Investors, businesses
and government institutions can contact RealtyTrac to license bulk foreclosure
and neighborhood data or purchase customized reports. For more information
contact our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com.

About
RealtyTrac Inc.

RealtyTrac (www.realtytrac.com) is the
leading supplier of U.S. real estate data, with more than 1.5 million active
default, foreclosure
auction and bank-owned
properties, and more than 1 million active for-sale listings on its website,
which also provides essential housing information for more than 100 million
homes nationwide. This information includes property characteristics, tax
assessor records, bankruptcy status and sales history, along with 20 categories
of key housing-related facts provided by RealtyTrac’s wholly-owned subsidiary,
Homefacts®.
RealtyTrac’s foreclosure
reports
and other housing data 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.

Media Contacts:
Jennifer
von Pohlmann
949.502.8300, ext. 139
jennifer.vonpohlmann@realtytrac.com

Brittney
Marin
949.502.8300, ext. 107
brittney.marin@realtytrac.com

Data and Report
Licensing:

800.462.5193
datasales@realtytrac.com

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