More than 1.3 million U.S. homeowners regained equity in their properties this year as prices rose after the worst real estate collapse since the 1930s, according to CoreLogic Inc.
About 600,000 borrowers who had been underwater, or owed more than their homes were worth, reached positive equity in the second quarter, the Santa Ana, California-based data provider said today. That added to the tally of more than 700,000 in the first three months of the year. About 22.3 percent of homeowners with a mortgage had negative equity at the end of June, down from 23.7 percent three months earlier.
Real estate prices are climbing as demand increases, giving homeowners more equity in their properties and the flexibility to sell or reduce their borrowing costs by refinancing. U.S. home prices increased 3.8 percent in July from a year earlier, the biggest annual gain in almost six years, according to a CoreLogic index released Sept. 4.
“Prices are snapping back quickly and it’s having a material impact on reducing negative equity,” Sam Khater, CoreLogic’s senior economist, said in a telephone interview. “Equity comprises the largest component of homeowner wealth, and their wealth is finally rising.”
Almost 2 million more borrowers with negative equity would be above water if home prices nationally increased by 5 percent, Anand Nallathambi, president and CEO of CoreLogic, said in today’s statement.
Home prices are rising faster than the U.S. average in many of the states that have the largest shares of underwater borrowers, Corelogic said.
In Nevada, 59 percent of homeowners with a mortgage were underwater, the biggest share in the U.S., followed by Florida with 43 percent, Arizona with 40 percent, Georgia at 36 percent and Michigan with 33 percent. Those states combined account for 34 percent of the total amount of negative equity in the U.S.
Home prices in Arizona jumped 17 percent in July from a year earlier, the largest increase, according to CoreLogic. They climbed 6.6 percent in Florida, 5.1 percent in Nevada and 4.8 percent in Michigan. Prices fell 0.2 percent in Georgia.