Thursday, July 12, 2012

Corelogic: 20 percent of homes with mortgages underwater during first quarter

Colorado was sixteenth in the nation for the percentage of its mortgages that were underwater during the first quarter of 2012. According to a report released today by CoreLogic, 20.7 percent of homes with mortgages in Colorado had a "negative equity share."

Of the 1.14 million mortgages outstanding in Colorado, 237,000 of them were underwater, while an additional 78,600, or 6.9 percent of them, were "near" underwater.

Nationwide, 23.7 percent of loans were underwater during the first quarter and an additional 4.9 percent were nearly so.

The only states with higher percentages of combined negative equity and near negative equity were Nevada, New Hampshire, Arizona, Florida, Michigan, Georgia, California, Virginia, Ohio, Rhode Island, Idaho, Illinois, Utah, Washington, and Maryland.

According to the report:

Nevada had the highest negative equity percentage with 61 percent of all mortgaged properties underwater, followed by Florida (45 percent), Arizona (43 percent), Georgia (37 percent) and Michigan (35 percent). These top five states combined have an average negative equity share of 44.5 percent, while the remaining states have a combined average negative equity share of 15.9 percent.

The low end of the market is where the bulk of the negative equity is concentrated. For example, for low-to-mid value homes valued at less than $200,000, the negative equity share is 31 percent for borrowers, almost twice the 15.9 percent for borrowers with home values greater than $200,000.
Corelogic has revised its method of collecting home equity data, so comparisons with past periods should be avoided.

Revised data was provided for recent quarters, however:

Colorado Q4 - 2011  22.94%
Colorado Q3 - 2011  22.25%
Colorado Q2 - 2011  22.45%
Colorado Q1 - 2011  21.97%
Colorado Q4 - 2010  21.59%
Colorado Q3 - 2010  21.37%
Colorado Q2 - 2010  21.42%
Colorado Q1 - 2010  21.97%
Colorado Q4 - 2009  21.96%
Colorado Q3 - 2009  20.74%

Total percentages for mortgages with negative equity share have not changed considerably since 2009. They have crept upward, however, Given recent trends in home prices which point toward mild increases, this small increase in negative equity likely could reflect a couple of things:

It indicates that the number of underwater homes is not quickly disappearing, and this is an important factor when we look at the declining home sales inventory in Colorado. The resilience of the percentages in underwater homes suggests that underwater homes are being kept off the market in the hope that price appreciation will lift these home out of negative territory, and this contributes to the declines in sales inventory.

At the same time, it also suggests that many underwater homes are not going into foreclosure in large numbers, and that those who are underwater are able to keep those mortgages either current or at least preventing them from going to final foreclosure sales.