CoreLogic’s third quarter equity report helps instill confidence for 2015.
Early today, CoreLogic released its quarterly equity report, detailing the state of both the nation and individual metros in regards to the current level of equity in the market. Nationwide, 2014’s third quarter has been a boon, with nearly 273,000 homes returning to positive equity. Overall, 44.6 million of the 49 million properties mortgaged in the U.S., or 90 percent, now have some level of equity, which marks a year-over-year increase of $800 billion to borrow equity in Q3 2014.
High levels of negative equity persist in Massachusetts, where 124,000 of the state’s 1.5 million mortgaged properties have fallen into negative equity, amounting to an 8.2 percent share of the total market. But things have improved considerably in the state’s capital.
In Boston, while negative equity remains a prevalent issue, levels are down considerably from the same time last year. In CoreLogic’s report, researchers found that the share of negative equity had fallen to 6.4 percent, a 3.2 percent year-over-year drop, while near negative equity had fallen 0.7 percent to 1.5 percent. The City on the Hill has struggled with affordability and inventory in recent years, but an upsurge of equity to the local market could help convince a new wave of homeowners to start selling, introducing a new crop of property to the active inventory and further drive down the pace of home price increases.
Equity Up Year-Over-Year
Broken down into it’s baser parts, progress was intermittent throughout the nation, but collectively, the U.S. moved forward this quarter, according to CoreLogic.
- In Q3 of 2014, 5.1 million homes, or 10.3 percent of all residential properties with a mortgage, remained in negative equity, compared to 5.4 million in Q2.
- Year-over-year, negative equity fell by 3 percent, representing a descrease in the number of underwater homes by nearly 1.5 million.
- The national value of negative equity fell 16.2 percent from Q3 2013 to Q3 2014 – a nearly $70 billion decline.
Less Friction in 2015
The level of negative equity in the nation remains above average, but the downward trend of average figures has prompted confidence in CoreLogic Deputy Chief Economist Sam Khater.
“Forecasted house price appreciation of about five percent over the next year suggests that negative equity should be at about 8 percent a year from now, still above average, but approaching the pre-crisis level,” he said.
Anand Nallathambi, CoreLogic CEO and president, said that a dwindling of negative equity should “translate into less friction in the housing market as we move forward.” A large part of that, Nallathambi pointed out, will rest on the shoulders of first-time buyers, who are likely to find 2015 a more attractive year for homeownership as rents continue to skyrocket.