Nearly 1 million properties returned to positive equity in the second quarter of 2014, bringing the total number of mortgaged residential properties with equity in the U.S. to more than 44 million.
The latest CoreLogic report revealed that 946,000 residential properties regained equity, and nationwide, borrower equity increased year over year by approximately $1 trillion in second quarter 2014.
Negative equity means that borrowers owe more on their mortgages than their homes are worth.
“The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction,” said Sam Khater, deputy chief economist for CoreLogic. “Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical homeowner.”
However, there are still approximately 5.3 million homes, or 10.7% of all residential properties with a mortgage, that are still in negative equity as of second quarter 2014. This is compared to 6.3 million homes, or 12.7%, for first quarter 2014, and a negative equity share of 14.9%, or 7.2 million homes, in second quarter 2013, representing a year-over-year decrease in the number of homes underwater by almost 2 million, or 4.2%.
“Many homeowners across the country are seeing the equity value in their homes grow, which lifts the economy as a whole,” said Anand Nallathambi, president and CEO of CoreLogic.
“With more and more borrowers regaining equity, we expect homeownership to become an increasingly attractive option for many who have remained on the sidelines in the aftermath of the great recession. This should provide more opportunities for people to sell their homes, purchase a different home or refinance an existing mortgage,” Nallathambi added.
For the homes in negative equity status, the national aggregate value of negative equity was $345.1 billion at the end of second quarter 2014, down $38.1 billion from approximately $383.2 billion in the first quarter 2014. Year-over-year, the value of negative equity declined from $432.9 billion in second quarter 2013, representing a decrease of 20.3% in 12 months.
In addition, of the 44 million residential properties with positive equity, approximately 9 million, or 19%, have less than 20-percent equity (referred to as “under-equitied”) and 1.3 million of those have less than 5%(referred to as near-negative equity).