Fewer borrowers nationwide owe more on their mortgages than their homes are worth, providing a boost to the housing recovery, according to a new report.
Roughly 200,000 borrowers escaped their “negative equity” positions during the final three months of last year, said real estate data provider CoreLogic. During all of last year, 1.7 million residential properties moved from negative to positive equity.
Overall, the nation’s negative equity fell from $670 billion in the third quarter to $628 billion at the end of last year, CoreLogic of Irvine said Tuesday.
A shortage of houses on the market has pushed up home prices in many markets, including California. But the supply could increase, cooling price increases, if more homeowners escape negative equity positions and regain the option of selling.
“The scourge of negative equity continues to recede across the country,” CoreLogic Chief Executive Anand Nallathambi said in a statement. “With fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen.”
The inability of homeowners to sell and move — say, for a better job — also places a drag on the overall economy.
In California, an estimated 1.7 million homes were underwater at year’s end, or about a quarter of all homes with a mortgage. The Riverside-San Bernardino-Ontario metropolitan area had 35.7% of its homes with a mortgage in negative equity — the fifth-highest percentage among the country’s largest metropolitan areas.
Nationwide, 10.4 million homes, or 21.5% of all homes with a mortgage, remain in negative equity, a decline from 10.6 million homes in the third quarter.