Q1 Shows Borrowers Reemerging From Negative Equity
Q1 one saw significant improvement in home values, helping nearly 850,000 borrowers out of negative equity and back into the sizzling real estate market, according to CoreLogic. The last quarter of 2012 saw nearly 10.5 million borrowers underwater. Flash-forward to Q1 of 2013 and that number decreased to 9.7 million borrowers hovering in negative equity.
“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity,” said Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity.”
The projection is that home prices may stabilize as more homeowners are freed from negative equity. Collectively, negative equity fell more than $50 billion to $580 billion over the last quarter.
Unfortunately, 2.1 million residential properties are at risk of falling into negative equity since they only have less than 5% equity in their homes. Another 11.2 million borrowers have less than 20% equity in their homes. Nevada has seen the highest share of negative borrowers at 45.4% of all residential borrowers underwater.
Out of the 9.7 million borrowers underwater, 3.7 million of them are underwater by an average of $79,000. Q1 showed great stride towards a recovered market, but the numbers still show a great number of borrowers struggling to reenter a market that is speeding up with vigor.