Increasing home prices through the end of last year have helped more borrowers obtain positive equity for their properties, which is a positive step for the housing recovery.
During the fourth quarter of 2012, CoreLogic said approximately 200,000 homeowners returned to a state of positive equity, meaning that these consumers no longer owe more on their mortgages than their homes are worth.
For the entire year, the total number of underwater homeowners declined by 1.7 million. Overall, the number of mortgaged residential properties with equity nationwide is now 38.1 million, CoreLogic said.
The bulk of home equity is concentrated for high-end properties, CoreLogic revealed. For example, 86% of homes valued for more than $200,000 have equity compared with 72% of homes who are priced below this figure.
Meanwhile, the Irvine, Calif.-based analytic firm stated that 10.4 million housing units with a mortgage (21.5% of the market) are still in negative equity through 4Q 2012. This figure is down from 10.6 million properties at the end of the third quarter.
Of the 38.1 homeowners who now have positive equity, 11.3 million have less than 20% equity. These borrowers are often referred to as “under-equitied,” meaning they may have a difficult time obtaining new financing for their homes due to underwriting constraints.
Additionally, at the end of last year, 2.3 million residential properties had less than 5% equity, symbolizing that these assets are near negative equity and are at risk should home prices fall.
CoreLogic said the current national aggregate value of negative equity is $628 billion, a quarter-over-quarter decrease of $42 billion.
Nevada had the highest percentage of mortgaged properties in negative equity at 52.4%, followed by Florida (40.2%), Arizona (34.9%), Georgia (33.8%) and Michigan (31.9%). These top five states accounted for 32.7% of negative equity across the country.
“The scourge of negative equity continues to recede across the country. There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen,” said Anand Nallathambi, president and CEO of CoreLogic. “The trend toward more homeowners moving back into positive equity should continue in 2013.”