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Underwater homes increase in fourth quarter, down for the year


The number of underwater homes increased nationally in the fourth quarter as home prices fell, pushing roughly 172,000 more borrowers into a situation where they owed more on a mortgage than their home could fetch on the market, according to CoreLogic.

But that shouldn't have people pushing the panic button, the company said.

Overall, 2014 ended with 1.2 million more people climbing out of a negative-equity situation than at the end of 2013, CoreLogic reported. Year-over-year in December, the number of underwater homes was down by nearly 19 percent. Some 89 percent of U.S. homes had equity to begin 2015.

The company also predicts that home prices will rise by 5 percent in 2015, lifting another million people out of an underwater situation.

In the fourth quarter, however, the number of underwater homes increased to 5.4 million, representing just less than 11 percent of all homes.The company also reported that near-negative equity situations are still a problem. Roughly 10 million homes, or one-fifth of all U.S. homes, have less than that 20 percent equity built up. This “under-equitied” situation can make it harder for a homeowner to refinance, buy and sell homes, CoreLogic said.  

At the state level, Nevada had the highest percentage of underwater homes at 24 percent, followed by Florida (23 percent) and Arizona (18 percent). Texas had the highest percentage of homes with equity at 97 percent.

“The share of homeowners that had negative equity increased slightly in the fourth quarter of 2014, reflecting the typical weakness in home values during the final quarter of the year,” Frank Nothaft, chief economist for CoreLogic, said in a news release.

 Nothaft said the company’s home price index declined 0.7 percent from September to December. Year-over-year, however, home prices were up nearly 5 percent, and the share of underwater homes fell by 2.6 percent.


 

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