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Sam Gendusa April 5, 2019

Newsletter - April 2019

Twelve years after the financial crisis of 2007, 2.2 million homes are seriously underwater, meaning the owners owe more on their mortgages than the homes are worth.

In its recently released Home Equity Report, housing data company CoreLogic reported that from the third quarter of 2018 to the fourth, the number of mortgaged homes in negative equity rose by 1.6%, to 4.2% of all mortgaged properties.

“The share of seriously underwater properties has dropped well below 10 percent in bellwether housing markets such as California, Washington, Texas, Colorado, and New York,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “But the underwater rate remains stubbornly high in markets where price appreciation has not been as strong during the housing recovery of the last six years.”

The states with the highest share of upside-down mortgages were Louisiana (21.7%), Illinois (18.5%), Missouri (17.8%), Mississippi (16.8%), and Ohio (16.2%). By contrast, the states with the highest share of equity-rich properties were California (43.5%), Hawaii (38.3%), Washington (34.5%), New York (33.2%) and Oregon (32.8%).

Despite the quarter-over-quarter rise, the number of mortgaged properties in negative equity fell 14% year-over-year. This was the first quarterly rise in negative equity since 2015.

According to the report, U.S. homeowners have seen their equity increase by 8.1% year-over-year (an average gain of $9,700). Homeowners in Hawaii had an average equity gain of $26,900, while the average homeowner in Louisiana lost $3,000.

“Our forecast for the CoreLogic Home Price Index predicts there will be a 4.5% increase in our national index from December 2018 to the end of 2019,” said Dr. Frank Nothaft, chief economist for CoreLogic. “If all homes experience this gain, this would lift about 350,000 homeowners from being underwater and restore positive equity.”

What do you think? Was this increase in upside-down mortgages a blip or a trend?

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