October 2016 - Changing of the Guard

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 59 of 67

58 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST More Homes Are Experiencing Positive Equity... More than 90 percent of homes across the nation are now above water. A s home prices continue to rise, the number of underwater borrowers has fallen significantly over the years to the point that 92 percent of all mortgaged proper - ties are in positive equity territory, according to a recent report from Fannie Mae. Fannie Mae reported that in the first quarter of this year, 46.7 million properties had positive equity levels, while 4 million bor - rowers were underwater or owed more on their mortgages than their homes were worth, according to data from CoreLogic. The factors that can lead to negative equity include a decline in a home's value, an increase in mortgage debt, or both factors combined. The report noted that out of 176 cities CoreLogic tracks, San Francisco topped those with the highest percentage of homes in positive equity territory in the first quarter of 2016. Additionally, the home equity positions of some of the 10 biggest cities have seen dramatic improvements when comparing the first quarter of 2010 to the first quarter of 2016. Specifically, Fannie Mae cited certain areas that have experienced large percentage increases, such as San Francisco-Redwood City- South San Francisco, California, which jumped from 90.1 percent in 2010 to 99.4 percent in 2016. Houston-The Woodlands-Sugar Land, Texas, increased from 85.6 percent in 2010 to 98.3 percent in 2016. Denver-Aurora-Lakewood, Colorado increased to 98.3 percent in 2016 from 75.2 percent in 2010. Los Angeles-Long Beach-Glendale, California rose from 72.8 percent in 2010 to 96.1 percent in 2016. Boston, Massachusetts leapt from 82.1 per - cent in 2010 to 94.3 percent in 2016. Fannie Mae also presented data from New York-Jersey City-White Plains, New York/New Jersey that jumped from 86.9 percent in 2010 to 94.0 percent in 2016. The Washington D.C.-Arlington- Alexandria area rose significantly from 69.6 percent in 2010 to 89.1 percent in 2016. The Chicago- Naperville-Arlington Heights re - gion of Illinois increased from 71.7 percent in 2010 to 83.3 percent in 2016. Miami-Miami Beach-Kendall, Florida nearly doubled from 46.7 percent in 2010 to 80.4 percent in 2016. Finally, Las Vegas-Henderson- Paradise, Nevada increased a whopping 4 times its percentage of 22.4 in 2010 to 80.1 in 2016. Fannie Mae also noted that Las Vegas' percentage of homes in positive equity territory grew 57.7 percent in that period, but it's still among the 10 cities with the lowest equity positions that CoreLogic tracked in the first quarter of this year. These top 10 cities with the high - est percentage of homes in negative equity territory for Q1 of 2016 include Ocala, Florida at 21.3 per- cent; Las Vegas-Henderson-Paradise, Nevada at 19.9 percent; Miami- Miami Beach-Kendall, Florida at 19.6 percent; Lakeland-Winter Haven, Florida at 18.8 percent; Atlantic City- Hammonton, New Jersey at 18.4 percent; Detroit-Dearborn-Livonia, Michigan at 17.8 percent; Camden, New Jersey at 17.2 percent; Flint, Michigan at 17.1 percent; Orlando- Kissimmee-Sanford, Florida at 17 percent; and finally Cleveland- Elyria, Ohio at 16.9 percent. However, Negative Equity Lingers in Both Urban and Suburban Areas Rising home prices are lifting many homeowners above water, but markets such as Las Vegas and Chicago still have many homeowners underwater. F ive years into the recov- ery of the U.S. housing market, 12 percent of homeowners are still underwater, with the worst of it hitting Las Vegas and Chicago, according to new data from Zil - low and ATTOM Data Solutions. Negative equity was down from 12.7 percent in Q1 and from 14.4 percent last year, and did not discriminate between urban and suburban areas. Overall, negative equity was mostly even between urban and suburban areas, though large disparities favoring greater numbers of underwater borrow - ers did show up in Cleveland and Detroit, according to Zillow. According to ATTOM, there were almost 12.4 million equity- rich properties—22.1 percent of the U.S. market—at the end of Q2 2016. That's up from a flat 22 percent from Q1 and from 19.6 percent in Q 4 2015. "At its worst, negative equity touched all kinds of homeowners in all kinds of markets," said Zillow Chief Economist Svenja Gudell. "Fast-forward a few years and the relative vibrancy of a given com - munity and how it has performed over the past few years, and not necessarily its location in the city or suburbs, matters a great deal." ATTOM's Q2 U.S. Home Equity and Underwater Report identified 6.66 million seriously underwater properties, or 11.9 percent of all U.S. residential properties. "Rising home prices are lifting all home equity boats: bailing out seriously under - water homeown- ers and enriching homeowners who already have positive equity," said Daren Blomquist, SVP at ATTOM. "Nationwide, home prices reached a new all-time high in June on the heels of 52 consecutive months of annual increases. While that national trend is con - sistent in most markets across the country, there are still some local markets and sub-markets that have been largely left behind by the housing recovery and which still have a high percentage of under - water homeowners." According to Zillow, all of the largest markets in the country now have negative equity rates below 20 percent for the first time ever. The highest rates were in Las Vegas and Chicago, both averaging just over 17 percent. ATTOM's data, however, paint - ed a worse picture among the 88 metros it studied. ATTOM found several metros to have underwater rates above 20 percent, most nota - bly Cleveland at 27.5 percent and Las Vegas at 25.7. Chicago showed 22.5 percent on ATTOM's report. "At its worst, negative equity touched all kinds of homeowners in all kinds of markets." —Svenja Gudell, Zillow GOOD NEWS BAD NEWS

Articles in this issue

Archives of this issue

view archives of TheMReport - October 2016 - Changing of the Guard