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Housing Equity Continues to Rise

By: Alexis McGee | Written: March 25, 2013

Approximately 200,000 more homes returned to positive equity during the fourth quarter of 2012, according to a new report released by CoreLogic. Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Map of Under-Equity and Negative Equity Share Combined by County

As per the chart above Nevada (52.4%), Florida (40.2%), Arizona (34.9%), Georgia (33.8%), and Michigan (31.9%) still lead the nation in negative equity, but the numbers are improving. The average amount of equity for all properties with a mortgage is 31%.

The national total value of negative equity dropped 6.7% ($42 billion) to $628 billion at the end of the fourth quarter from $670 billion at the end of the third quarter in 2012. This decrease was driven in large part by an improvement in home prices.

This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million and the number of mortgaged residential properties with equity to 38.1 million. The analysis also shows that 10.4 million, or 21.5% of all homes with a mortgage, were still in negative equity at the end of the fourth quarter of 2012. This figure is down from 10.6 million homes, or 22%, at the end of the third quarter of 2012.

What does this mean?

When housing prices were dropping, people lost their equity in their home, which turned into owing more on their homes than they were worth. This negative equity, on top of employment losses, lead to people walking away from homes and causing a flood of foreclosures.

Now with the rise in home prices, many homeowners once again have equity in their home – to the tune of 200,000 new homes with equity in the last quarter alone.  These homeowners are less likely to walk away and let their house go through foreclosure. They are more motivated to try and keep their home, or sell it and put some money in the bank. This trend has also been seen in our dropping foreclosure numbers. This is all great news – as the housing rebound is in full force.

CoreLogic reports we only need to see a 5% increase in home prices to see another 1.8 Million properties move back to positive equity. That number bodes well for investors, who can capitalize and make deals on these postive equity homes.

You can learn more about exactly how to find, fund and close wholesale foreclosure deals, directly with these motivated homeowners, without using any of your own cash or credit, in my upcoming Live, Free Webinar Foreclosure Investors: Make Fast Profits Now“. If you have not registered yet, make sure you do so asap, as we fill up quickly.

Registration on your right or HERE. Talk to you this Wednesday (6pm PDT, 9pm EST)!

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