There were 7,443,580 U.S. residential properties that were seriously underwater — where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value — at the end of the second quarter 2015, according to a new report from RealtyTrac.com. This represents a 13.3 percent of all properties with a mortgage. The second quarter underwater numbers were up slightly from the previous quarter — making this the second consecutive quarter with a slight increase in both the number and share of seriously underwater properties. However, to keep this trend in perspective, the number and share of seriously underwater homes peaked in the second quarter of 2012 at 12,824,729 — or 28 percent of all homes with a mortgage. “Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” Daren Blomquist, vice president at RealtyTrac, said in the release. “However, the share of homeowners with the double-whammy of seriously underwater properties that are also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012.” Click here to see a video from RealtyTrac.com on this report. The share of distressed properties — those in some stage of the foreclosure process — that were seriously underwater at the end of the second quarter was 34.4 percent, down from 35.1 percent in the first quarter of 2015 and down from 43.6 percent in the second quarter of 2014, to the lowest level since tracking began in the first quarter of 2012. Conversely, the share of foreclosures with positive equity increased to 42.4 percent in the second quarter, up slightly from 42.1 percent in the first quarter and up from 34.1 percent in the second quarter of 2014. Share of equity-rich mortgaged properties up 1 million from year ago The universe of equity-rich mortgaged properties — those with at least 50 percent equity — decreased on a quarter-over-quarter basis for the second straight quarter, down to 10.9 million, representing 19.6 percent of all properties with a mortgage at the end of the second quarter. That was down from 11.1 million, representing 19.8 percent, at the end of the first quarter and down from 11.3 million, representing 20.3 percent, at the end of the fourth quarter, but still up from 9.9 million, representing 18.9 percent, at the end of the second quarter of 2014. “Although the number of equity-rich homeowners with a mortgage has increased by one million compared to a year ago, that number dropped by nearly 300,000 between the end of 2014 and the middle of 2015,” Blomquist said in the release. “The number of homeowners with a mortgage who have at least 20 percent equity has dropped by more than 900,000 during the past six months, indicating that homeowners who have gained substantial equity thanks to the housing price recovery over the past three years are taking advantage of that newfound equity,” Blomquist said in the release. ”Some are leveraging that equity into a higher LTV refinance or a move-up purchase, some may be downsizing into an all-cash purchase, and some may be cashing out of homeownership altogether. Those homeowners cashing out of homeownership altogether would explain why the nation’s overall homeownership rate continued to decline in the second quarter even as homeownership rates among Millennials increased.” Major metro areas with the highest percentage of equity-rich properties reflect areas of continued growth in home prices: San Jose, California (43.8 percent) San Francisco, California (38.3 percent) Honolulu, Hawaii (36.7 percent) Los Angeles, California (32 percent) New York (30.7 percent) Pittsburgh, Pennsylvania (29.4 percent) Poughkeepsie, New York (28.0 percent) Oxnard, California (27.5 percent) San Diego, California (26.9 percent) “Over the past two years, the Seattle region has seen the percentage of homeowners who are seriously underwater drop by over 56 percent, one of the fastest and most impressive drops in the country,” Matthew Gardner, chief economist at Windermere Real Estate in Seattle, said in the release. “Usually a decline of this magnitude would suggest an uptick in the number of homes for sale, but unfortunately for Seattle, I don’t see this taking place. Many of these homeowners are simply too apprehensive or don’t have the financial capacity to move. But what we lose in new listings, we gain in overall market stability.” Markets with the most seriously underwater properties Markets with a population greater than 500,000 with the highest percentage of seriously underwater properties in Q2 2015 were: Lakeland, Florida (28.5 percent) Cleveland, Ohio (28.2 percent) Las Vegas, Nevada (27.9 percent) Akron, Ohio (27.3 percent) Orlando, Florida (26.1 percent) Tampa, Florida (24.8 percent) Chicago, Illinois (24.8 percent) Palm Bay, Florida (24.4 percent) Toledo, Ohio (24.3 percent) Markets where the share of distressed properties — those in some stage of foreclosure — that were seriously underwater exceeded 50 percent in the first quarter of 2015 included: Las Vegas, Nevada (57.7 percent) Lakeland, Florida (54.8 percent) Cleveland, Ohio (52.9 percent) Chicago, Illinois (52.5 percent) Tampa, Florida (51.7 percent) Palm Bay, Florida (51.5 percent) Orlando, Florida (51.2 percent). “Many consumers in foreclosure don’t understand the positive effects of the increased equity we are seeing across the Ohio markets, and the opportunities that this might bring in assisting them to avoid foreclosure,” Michael Mahon, president at HER Realtors in Ohio, said in the release. “Across much of Ohio, housing demand is driving increased prices and lower days on the market, contributing to positive equity growth. For homeowners facing troubled financial circumstances due to job loss, divorce, death in the family, or health concerns, the best advice would be to consult with a real estate agent early in the process.” Markets with the highest share of positive equity foreclosures Those states with the highest percent of distressed properties with positive equity included: Colorado (72.0 percent) Alaska (69.8 percent) Texas (66.4 percent) Oklahoma (65.2 percent) Nebraska (64.4 percent) Major markets […]
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