Another sign of an improving economy — an improvement in the equity position of U.S. households. The Federal Reserve Board of Governors recently released data showing that homeowners are continuing to regain the equity in their homes they lost during the housing crisis that began in 2007.
In its analysis of the data, CoreLogic found that at the end of the first quarter of 2014, 12.7 percent (6.3 million) of homes with a mortgage were in negative equity, meaning the homeowners owed more on the mortgage than the property was worth. This is a significant decrease from the year prior, when 20.2 percent of homeowners were “underwater.”
“Prices continue to rise across most of the country and significantly fewer borrowers are underwater today compared to last year, “ said CoreLogic president and CEO Anand Nallathambi. “An additional rise in home prices of 5 percent, which we are projecting will occur over the next 12 months, will lift another 1.2 million properties out of the negative equity trap.”
States with the highest share of negative-equity properties include Nevada, Arizona, Florida, and Mississippi. Those with the lowest share are Texas, Montana and North Dakota.
The current level has not been seen since 2007 and bodes well for the real estate market, as fewer underwater borrowers help unlock housing supply and demand.