7.4 MillionHomeowners with at least 50 Percent Equity;
24 Percent of Homeowners in Foreclosure Process HaveEquity
IRVINE,Calif. – Sept. 5, 2013 — RealtyTrac® (www.realtytrac.com), thenation’s leading source for comprehensive housing data, today released its U.S.Home Equity & Underwater Report for September 2013, which shows thatwhile 10.7 million residential homeowners nationwide owe at least 25 percent ormore on their mortgages than their properties are worth, another 8.3 millionhomeowners are either slightly underwater or slightly above water, putting themon track to have enough equity to sell sometime in the next 15 months — withoutresorting to a short sale.
The 8.3 million include homeowners with a loan to value (LTV) ratiofrom 90 to 110 percent, meaning they have between 10 percent positive equityand 10 percent negative equity. These homeowners represented 18 percent of allU.S. homeowners with a mortgage as of the beginning ofSeptember.
The 10.7 million residential properties with anLTV ratio of at least 125 percent represented 23 percent of U.S. residentialproperties with a mortgage — down from 11.3 million deeply underwaterproperties representing 26 percent of all residential properties with amortgage in May 2013 and down from 12.5 million deeply underwater propertiesrepresenting 28 percent of all residential properties with a mortgage inSeptember 2012.
“Steadily rising home prices are lifting allboats in this housing market and should spill over into more inventory of homesfor sale in the coming months,” said Daren Blomquist, vice president atRealtyTrac. “Homeowners who already have ample equity are quickly building onthat equity, while the 8.3 million homeowners on the fence with little or noequity are on track to regain enough equity to sell before 2015 if home pricescontinue to increase at the rate of 1.33 percent per month that they have sincebottoming out in March 2012.
“In addition, nearly one infour homeowners in foreclosure has at least some equity, giving them a betterchance to avoid foreclosure without resorting to a short sale — assuming theyrealize they have equity and don’t miss the opportunity to leverage thatequity,” Blomquist added. “Even homeowners deeply underwater have reason forhope, with about 150,000 each month rising past the 25 percent negative equitymilestone — although it will certainly take years rather than months beforemost of those homeowners have enough equity to sell other than via shortsale.”
Other high-level findings from thereport:
- More than 126,000properties in the foreclosure process nationwide had an LTV of 100 percent orlower in September, representing 24 percent of all homes in the foreclosureprocess. States with the highest percentage of foreclosures with equityincluded Oklahoma (54 percent), Hawaii (51 percent), New York (47 percent), andTexas (46 percent).
- Stateswith the highest percentage of deeply underwater homes (LTV of 125 percent orhigher) included Nevada (46 percent), Illinois (40 percent), Florida (40percent), Michigan (38 percent), Rhode Island (34 percent), and Ohio (31percent).
- Metro markets with thehighest percentage of homes with resurfacing equity (LTV from 90 to 110percent) included Omaha, Neb., (29 percent), Colorado Springs, Colo., (29percent), Tulsa, Okla., (29 percent), Little Rock, Ark., (28 percent), andRaleigh, N.C. (28 percent).
- Nationwide 7.4 millionhomeowners with a mortgage had 50 percent equity or more, representing 16percent of all homeowners with a mortgage. Metro markets with the highestpercentage of homeowners with at least 50 percent equity included Honolulu (36percent), San Jose, Calif., (35 percent), Poughkeepsie, N.Y. (30 percent),Pittsburgh (29 percent), San Francisco (29 percent), and New York (27 percent).
Home Equity County-Level Heat Maps
“Negative equity will always hamperthe housing market from making a strong recovery; however, the amount ofhomeowners with negative equity is shrinking,” said Emmett Laffey, CEO of LaffeyFine Homes International, covering Long Island and the five boroughsof New York City. “New York metro home prices are increasing at arate of about 1 percent per quarter and thousands of homeowners will now be ina position to sell and take some equity with thempost-closing.”
“The housing market in Oklahoma City and Tulsacontinues to improve, with a majority of homeowners having at least some equityin their homes,” said Shel Detrick, CEO of PrudentialDetrick/Prudential Alliance Realty, covering the Oklahoma City andTulsa markets. “If home prices continue to rise, close to one-third of allhomeowners in the Oklahoma City metro area will have enough equity to selltheir homes in the next year, which is exciting in this inventory-sparsemarket.”
“Due to the increased market demand and lowinventory levels we have experienced during much of 2013, negative equitysituations have only been noted in isolated circumstances in many areas ofOhio,” said Michael Mahon, Executive Vice President of HERRealtors, covering the Columbus, Cincinnati and Dayton markets inOhio. “This trend will continue to add more buyers and sellers into apositively increasing equity market in months to come, as well as an increasedrate of recovery across Ohio for 2013.”
“Negative equity certainly impacts a homebuyer’s decisionto sell, and we expect sellers to come off the fence as prices rise and equityis gained back,” said Steve Roney, CEO of PrudentialUtah Real Estate. “This will provide added momentum to therecovery as inventories rise and buyers have more options.”
“Negativeequity continues to be an issue in the Reno-Sparks marketplace, however thesituation is improving due to strong price increases,” said Craig King, COO ofChaseInternational, covering the Reno and Lake Tahoe markets. “The effect of rising home prices and homeowners with resurfacing equity areboth encouraging trends. We believe some of these individuals are starting toshow up in our sales activity right now as part of a move-up market. There has been no move up market in the area since 2006 so we are excited aboutthat.”
“For the past few years, many people have been unableto sell their homes and upgrade due to lack of equity or in some cases negativeequity,” said Rich Cosner, president of PrudentialCalifornia Realty, covering Orange, Riverside and San Bernardinocounties in Southern California. “With the tremendous growth in equity over thepast year, many homeowners are now able to sell their homes and re-buy, whichis a very positive outcome for the real estate market.”
“Manyhomeowners have been predisposed to having negative equity for several yearsand may not realize that if they put their home on the market at the rightprice they could sell for a favorable outcome,” said Dan Forsman, president andCEO of PrudentialGeorgia Realty. “The market is starving from a lack ofinventory, but as the dial of the housing market moves towards positive andhome appreciation continues to climb, there will certainly be an increase inthe supply of properties.”
The RealtyTrac U.S. Home Equity &Underwater report provides counts of residential properties based on severalcategories of equity — or loan to value (LTV) — at the state, metro and countylevel, along with the percentage of total residential properties with amortgage that each equity category represents. The equity/LTV calculation isderived from a combination of record-level open loan data and record-levelestimated property value data, and is also matched against record-levelforeclosure data to determine foreclosure status for each equity/LTVcategory.
Deeplyunderwater: Loan to value ratio of 125 percent or above, meaning thehomeowner owed at least 25 percent more than the estimated market value of theproperty.
Resurfacing Equity: Loan tovalue ratio from 90 percent to 110 percent, meaning the homeowners had anywherefrom 10 percent positive equity to 10 percent negativeequity.
Equity Rich: Loan to value ratioof 50 percent or lower, meaning the homeowner had at least 50 percentequity.
Foreclosures w/Equity:Properties in some stage of the foreclosure process (default orscheduled for auction, not including bank-owned) where the loan to value ratiowas 100 percent or lower.
The RealtyTrac U.S.Foreclosure Market Report is the result of a proprietary evaluation ofinformation compiled by RealtyTrac; the report and any of the information inwhole or in part can only be quoted, copied, published, re-published,distributed and/or re-distributed or used in any manner if the userspecifically references RealtyTrac as the source for said report and/or any ofthe information set forth within thereport.
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RealtyTrac (www.realtytrac.com) is theleading supplier of U.S. real estate data, with more than 1.5 million activedefault, foreclosureauction and bank-ownedproperties, and more than 1 million active for-sale listings on its website,which also provides essential housing information for more than 100 millionhomes nationwide. This information includes property characteristics, taxassessor records, bankruptcy status and sales history, along with 20 categoriesof key housing-related facts provided by RealtyTrac’s wholly-owned subsidiary, Homefacts®.RealtyTrac’s foreclosurereports 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 andconsumers, to help evaluate housing trends and make informed decisions aboutreal estate.
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