Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Alternative Investments > Private Equity

Negative Equity Falls as Foreclosures Rise; Nevada, Arizona Worst

Your article was successfully shared with the contacts you provided.

CoreLogic, a provider of information, analytics and business services, released data on Monday that show that negative equity in residential properties has declined in Q3. This is the third consecutive quarter in which negative equity has declined.

In Q2, 11 million, or 23%, of all residential properties with mortgages were in negative equity; in Q3, that has fallen to 10.8 million, or 22.5%. Before anyone gets excited about a housing recovery, however, CoreLogic says that this decrease is “due primarily to foreclosures of severely negative equity properties rather than an increase in home values.”

The data also show that 2.4 million borrowers were near negative equity; in other words, they held less than 5% equity in their homes in Q3. Mortgages with negative equity and those with near-negative equity made up 27.5% of all residential properties with mortgages across the country.

Negative equity is concentrated in five states: Nevada, at 67%; Arizona, 49%; Florida, 46%; Michigan, 38%; and California, 32%. The largest drops in negative equity were, according to CoreLogic, in the hardest hit states: Alaska, Nevada, Arizona, California, and Florida. Idaho and Alabama saw their proportion of negative equity rise; they are the top two states in which home prices are falling.

States with the highest amount of positive equity are New York, Hawaii, Massachusetts, Rhode Island, and Connecticut. Some states are “barbells”—that is, they have large numbers of homeowners with positive equity and also large numbers with negative equity. Among these are Rhode Island, the most extreme; and to a lesser extent are Massachusetts, New Jersey, Washington, D.C., and California.

Mark Fleming, chief economist with CoreLogic, said in a statement, “Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.