Photo credit: Michael Patrick
The number of underwater homes in the US has halved in the last three years, as equity builds once more and the market recovers.
Underwater properties are homes that owe more on the mortgage than the home itself is actually worth, a situation that struck many homeowners in the aftermath of the housing crash. The water levels, though, are slowing receding.
Data from RealtyTrac shows that there were 6.4 million US properties “seriously underwater” — where the combined loan amount secured by the property is at least 25 per cent higher than the property’s market value — at the end of 2015.
This represents 11.5 percent of all properties with a mortgage, but also a stark improvement upon conditions several years ago. Indeed, at the end of the third quarter of 2015, the figure was at 6.9 million and at the end of 2014, it was at 7.1 million.
The number of seriously underwater properties at the end of 2015 was half the 12.8 million (28.6 per cent of all properties with a mortgage) recorded at the peak of Q2 2012. Indeed, over the last three and a half years, the number of severely underwater homes has halved.
“We continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory,” says RealtyTrac Vice President Daren Blomquist. “At the other end of the spectrum, the growing number of equity rich properties reflects a moribund move-up market and restrained leveraging of home equity by U.S. homeowners.”
The number of equity rich homes at the end of the year totalled 12.6 million, p 1.4 million higher than the 11.2 million (20.3 per cent of all properties with a mortgage) at the end of 2014.Google+