Home Equity Situation Improves in the U.S., Data Suggests

Home EquityEarlier this week, real estate market research firm RealtyTrac released a comprehensive report chock full of interesting statistics about the home equity situation in the United States. The report covered the fourth, or December ending quarter of 2014, and all signs point to substantial improvement in terms of the number of consumers considered seriously underwater, and the number of “equity rich” homes in the U.S. market.

According to RealtyTrac’s U.S. Home Equity and Underwater Report for the December 2014 frame, there were 7,052,570 residential properties that quarter considered to be seriously underwater, or with the borrower’s unpaid mortgage debts 25 percent or more greater than the home’s estimated market value. This figure represented 13 percent of all U.S. homes with a mortgage, and marked the lowest level on RealtyTrac’s record since it first started tracking home equity figures in the March 2012 quarter.

In the June 2012 frame, there were an all-time high 12.8 million seriously underwater borrowers, or 29 percent of all homeowners with a mortgage that particular quarter.

“Median home prices nationwide bottomed out in March 2012 and since then have increased 35 percent, lifting 5.8 million homeowners out of seriously underwater territory,” said RealtyTrac vice president Daren Blomquist in a statement. “While the remaining seriously underwater properties continue to be a millstone around the neck of some local markets, the growing number of equity rich homeowners should help counteract the downward pull of negative equity in many markets, empowering those housing markets — and by extension their local economies — to walk on water in 2015.”

As for equity rich properties, which are residential properties with at least 50 percent positive equity, RealtyTrac reported that there were 11,249,646 such homes in the U.S., or 20 percent of all properties connected to a mortgage. This represented an increase of about 2.2 million from the December 2013 quarter’s figure of 9,097,325 equity rich properties. According to First Team Real Estate senior vice president of sales Christopher Pollinger, home price increases have allowed consumers with positive equity their share of options “before they face foreclosure.”

A number of major metropolitan markets had less than 10 percent of properties in the area considered as seriously underwater. These included San Jose (2 percent), Denver (4 percent), Portland (5 percent), Minneapolis (5 percent), Boston (5 percent), San Francisco (5 percent), Pittsburgh (6 percent), Houston (8 percent), Dallas (8 percent), and Seattle (9 percent).

In another interesting takeaway, RealtyTrac’s quarter four 2014 report shows that the percentage of distressed properties with positive equity (42 percent) increased greatly from the previous year’s share of 31 percent. 35 percent of these properties were seriously underwater at the close of quarter four, down from 48 percent in the year-ago fourth calendar quarter.

Denver was tops among the cities listed by RealtyTrac as having a high share of distressed properties with positive equity, ranking first with a share of 81 percent. Others over the 60 percent mark include Pittsburgh (81 percent), Oklahoma City (76 percent), Austin (73 percent), Nashville (70 percent), San Antonio (63 percent), San Francisco (62 percent), and Raleigh (61 percent).