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Underwater homes tick up in Q2

Higher home prices have meant that homeowners have consistently gained equity at a fast pace, and the number of homeowners owing more on their mortgages than their homes could sell for has declined steeply from the dire days following the housing-market crash.

But after years of steady declines, it appears the number of underwater homes has been on the rise for the past year, Attom Data Solutions reported this week.

Seriously underwater U.S. properties — or homes whose mortgage balance exceeds the market value of the home by 25 percent or more — rose to 5.59 million in the April-June period, the fourth consecutive quarter with an increase, the company said

homeequitThe U.S. saw a net gain of 390,322 seriously underwater properties in the second quarter over the 5.2 million mark in the first quarter, according to the company. The second quarter also saw the first year-over-year gain in seriously underwater properties since at least 2012.

Attom estimated there was a second-quarter 2018 net gain of more than 163,000 underwater properties compared to the second quarter of 2017, when there were an estimated 5.43 million underwater properties, according to Attom Data Solutions.

Most other tracking agencies have reported falling underwater figures in the wake of the steady national rise in home prices, however.

“This was puzzling to us as well,” said Attom Senior Vice President Daren Blomquist. Blomquist said several cities have bounced back in terms of home prices, but other markets not so much.

“The areas at the top of the list of seriously underwater markets tend to be areas that have more long-term fundamental weakness in the economy that are keeping home prices from bouncing back as strongly in this housing recovery — places like Toledo, Ohio; Scranton, Pennsylvania; and Chicago,” he told Scotsman Guide News.

The percentage of seriously underwater homes compared to the overall market also ticked up for the fourth consecutive quarter to reach 10.1 percent of all mortgaged properties. That percentage crossed the 10 percent threshold for the first time since the third quarter of 2016, when it was 10.8 percent.

The seriously underwater numbers hit a low point in the third quarter of 2017, at an estimated 4.6 million, or 8.7 percent of all properties with a mortgage. Seriously underwater properties have come down from a high-water mark of 12.8 million in the second quarter of 2012, then representing 28.6 percent of all properties.

Attom data also suggests that the numbers of equity rich homeowners --- or people whose mortgage represents less than 50 percent of their home’s market value — has also declined for four consecutive quarters. The number of equity rich homeowners fell to 13.6 million in the second quarter, down from 14 million at the high-water mark a year earlier.

Other tracking agencies have reported big gains in homeowner equity and lower numbers of underwater properties.

CoreLogic estimated the number of underwater homes at just 2.5 million nationwide in the first quarter, down 21 percent year over year. Over the same period, homeowners gained $1.1 trillion in home equity, primarily with the rise in home prices, according to CoreLogic.  


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