Underwater homes fall 1.2 million in US

The number of underwater homes in the USA has fallen 1.2 million in the last year, as negative equity continues to fall.

Research by ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, shows that as of the end of the first quarter of 2017 there were nearly 5.5 million (5,497,771) US properties seriously underwater — where the combined loan amount secured by the property was at least 25 perc ent higher than the property’s estimated market value — up from 5.4 million in Q4 2016 but down by more than 1.2 million from the 6.7 million recorded in Q1 2016.

The 5.5 million seriously underwater properties at the end of Q1 2017 represented 9.7 percent of all U.S. properties with a mortgage, up from 9.6 percent in Q4 2016 but down from 12.0 percent in Q1 2016.

“While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets of the housing market,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “For example, we continue to see one in five properties seriously underwater in several Rust Belt cities along with Las Vegas and central Florida. Additionally, close to one-third of homes valued below $100,000 are still seriously underwater.”


US foreclosures fall to record lows

10th August 2016

The number of home foreclosures in the US has fallen to a record low, as fewer borrowers fall behind on loan payments.

New data from the Federal Reserve Bank of New York shows that lenders began proceedings against 82,000 homeowners to reclaim their mortgaged property in the second quarter of 2016, the lowest in the report’s 18-year history.

According to the report, household debt increased by $35 billion (a 0.3 per cent increase) to $12.29 trillion in Q2 2016. This moderate growth was driven by increases in auto loan and credit card debt, which increased by $32 billion and $17 billion respectively. Mortgage debt, on the other hand, declined by $7 billion, after a $120 billion increase in the first quarter, and student loan balances were roughly flat, while overall delinquency rates improved.

Deliquency rates continued a trend that has been in place since 2010. In the second quarter, 4.8 per cent of outstanding debt was in some stage of delinquency down from 5 per cent in the previous quarter, and 5.6 per cent in the second quarter of 2015.

The figures are echoed by data from CoreLogic, which found that foreclosure inventory declined by 25.9 per cent in June 2016 and completed foreclosures declined by 4.9 per cent, compared with June 2015. The number of completed foreclosures nationwide decreased year over year from 40,000 in June 2015 to 38,000 in June 2016, representing a decrease of 67.5 per cent from the peak of 117,835 in September 2010.

“The impact of the inexorable reduction over the past several years in both foreclosure trends and serious delinquencies is driving the long-awaited return to more historic norms for the US housing market,” says Anand Nallathambi, president and CEO of CoreLogic. “We expect the combination of continued home price appreciation of more than 5 per cent and rising employment levels in the year ahead will help cement the gains we have had and perhaps accelerate them.”


Underwater homes in the US increasingly concentrated in Rust Belt

16th June 2016

Underwater homes in the US are increasingly concentrated in the Rust Belt, as the housing market recovers at different rates.

At the end of 2016, negative equity was still a drag on the US property recovery, with 13.4 per cent of homeowner owing more on their mortgage than their home is worth. What does the picture look like three months later?

At the end of the first quarter of 2016, fewer homes are underwater, but the location of the underwater homes is also changing. Now, homeowners who are underwater on their mortgages are increasingly concentrated in the Rust Belt, while West Coast homeowners are less likely to be in negative equity, according to Zillow.

In the first quarter of 2012, the West Coast, Southeast, and Rust Belt regions had a disproportionately greater share of underwater homeowners. For example, the Southeast had 20.4 percent of homes with a mortgage, but 24.9 percent of homes in negative equity. Four years later, the West Coast, home to hot markets like the Bay Area, Portland, and Seattle, has only 10.2 per cent of homeowners with negative equity, but 15.2 per cent of all mortgaged homeowners. The imbalance was worst in the Rust Belt region, which includes Wisconsin, Illinois, Indiana, Michigan and Ohio, and which had an unevenly large share of underwater homeowners.

“When the housing bubble burst, the West Coast had more than its fair share of underwater homeowners,” says Zillow Chief Economist Dr. Svenja Gudell. “But the strong local economy and job markets have significantly helped these housing markets recover, and several are now more expensive than they were during the housing bubble. Other parts of the country didn’t get those same benefits, and until market fundamentals improve, homeowners and buyers in these areas will be facing disproportionately higher levels of negative equity as they navigate the housing market.”

For example, Las Vegas has been the prime example of the housing bubble and bust for years, with nearly three-quarters of mortgaged homeowners underwater when the market bottomed out in in the first quarter of 2012. But Chicago now has the highest negative equity rate among large US markets, surpassing Las Vegas in the first quarter of 2016. At its worst, Chicago had a 41.1 per cent rate of negative equity, but its recovery has been sluggish and the negative equity rate has declined more slowly than elsewhere.

Nationally, 12.7 per cent of homeowners with a mortgage are in negative equity, down from a peak of 31.4 per cent recorded in Q1 2012.

Negative equity still a drag on US housing

16th December 2015


Despite improvements in the negative equity rate, underwater mortgages are holding back the US housing market from full recovery.

The US negative equity rate continued to drop in the third quarter of 2015, according to Zillow’s latest Negative Equity Report. Nationally, 13.4 per cent of homeowners owe more on their mortgage than their home is worth, down from 16.9 percent a year ago.

Negative equity is one of the most persistent reminders of the housing market crash. Homeowners who owe more on their mortgage than their homes are worth cannot sell, which holds back markets from recovering.

Typically, negative equity rates will be close to 2-5 percent. Today, eight years after the housing crash, it remains a major barrier to a full recovery in certain markets. In Las Vegas, for example, almost one in four homeowners remain underwater, and another one in five are effectively underwater, meaning they have less than 20 per cent equity in their home and therefore can’t cover the cost of selling their home and buying another.

Las Vegas has been submerged underwater for some time, with the highest negative equity rate in the US for the past four and a half years. Kansas City and Cleveland, with 16.6 and 16.8 per cent negative equity respectively, are not far behind.

San Francisco is one of only large markets where less than 5 per cent of homeowners are underwater – and it is currently feared as entering a potential housing bubble, a sign of just how varied the US property market’s recovery is.

“Negative equity has become almost an afterthought in a handful of the nation’s hottest markets, but is holding back the recovery in dozens of large markets nationwide,” says Zillow Chief Economist Dr. Svenja Gudell.

“Despite steady declines in negative equity, many cities are still facing tight inventory, especially among entry-level homes.”