More houses are moving into positive equity as home prices continue to rise and push homeowners out of the water.
CoreLogic’s latest report found that 300,000 homes returned to positive equity in the first quarter of 2014, bringing the total number of mortgage residential properties with equity to more than 43 million.
“Prices continue to rise across most of the country and significantly fewer borrowers are underwater today compared to last year,” said Anand Nallathambi, president and CEO of CoreLogic.
To put this into numbers, approximately 6.3 million homes, or 12.7% of all residential properties with a mortgage, were still in negative equity as of first quarter 2014 compared to 6.6 million homes, or 13.4% for the fourth quarter of 2013.
Year-over-year, the negative equity share was 20.2%, or 9.8 million homes in the first quarter of 2013.
“Despite the massive improvement in prices and reduction in negative equity over the last few years, many borrowers still lack sufficient equity to move and purchase a home,” said Sam Khater, deputy chief economist for CoreLogic. “One in five borrowers have less than 10% equity in their property, which is not enough to cover the down payment and additional costs associated with a conventional mortgage.”
As a whole, for the homes in negative equity status, the national aggregate value of negative equity was $383.7 billion at the end of first quarter 2014, down $16.9 billion from approximately $400 billion in the fourth quarter 2013.
But despite more borrowers being in a healthy position, approximately 10 million still have less than 20% equity.
“Borrowers with less than 20-percent equity, referred to as “under-equitied,” may have a more difficult time refinancing their existing home or obtaining new financing to sell and buy another home due to underwriting constraints,” the report said.
Under-equitied mortgages accounted for 20.6% of all residential properties with a mortgage nationwide in first quarter 2014, with more than 1.5 million residential properties at less than 5% equity, referred to as near-negative equity.
Properties that are near-negative equity are considered at risk if home prices fall.
Although, home prices have recorded 26 months of consecutive year-over-year increases, CoreLogic’s most recent home price index said.