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10.7 Million Homes Remain Deeply Underwater in September but Another 8.3 Million on Track to Resurface Before 2015

7.4 Million Homeowners With at Least 50 Percent Equity; 24 Percent of Homeowners in Foreclosure Process Have Equity

IRVINE, CA -- (Marketwired) -- 09/05/13 -- RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its U.S. Home Equity & Underwater Report for September 2013, which shows that while 10.7 million residential homeowners nationwide owe at least 25 percent or more on their mortgages than their properties are worth, another 8.3 million homeowners are either slightly underwater or slightly above water, putting them on track to have enough equity to sell sometime in the next 15 months -- without resorting to a short sale.

The 8.3 million include homeowners with a loan to value (LTV) ratio from 90 to 110 percent, meaning they have between 10 percent positive equity and 10 percent negative equity. These homeowners represented 18 percent of all U.S. homeowners with a mortgage as of the beginning of September.

The 10.7 million residential properties with an LTV ratio of at least 125 percent represented 23 percent of U.S. residential properties with a mortgage -- down from 11.3 million deeply underwater properties representing 26 percent of all residential properties with a mortgage in May 2013 and down from 12.5 million deeply underwater properties representing 28 percent of all residential properties with a mortgage in September 2012.

"Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months," said Daren Blomquist, vice president at RealtyTrac. "Homeowners who already have ample equity are quickly building on that equity, while the 8.3 million homeowners on the fence with little or no equity are on track to regain enough equity to sell before 2015 if home prices continue to increase at the rate of 1.33 percent per month that they have since bottoming out in March 2012."

"In addition, nearly one in four homeowners in foreclosure has at least some equity, giving them a better chance to avoid foreclosure without resorting to a short sale -- assuming they realize they have equity and don't miss the opportunity to leverage that equity," Blomquist added. "Even homeowners deeply underwater have reason for hope, with about 150,000 each month rising past the 25 percent negative equity milestone -- although it will certainly take years rather than months before most of those homeowners have enough equity to sell other than via short sale."

Other high-level findings from the report:

  • More than 126,000 properties in the foreclosure process nationwide had an LTV of 100 percent or lower in September, representing 24 percent of all homes in the foreclosure process. States with the highest percentage of foreclosures with equity included Oklahoma (54 percent), Hawaii (51 percent), New York (47 percent), and Texas (46 percent).

  • States with the highest percentage of deeply underwater homes (LTV of 125 percent or higher) included Nevada (46 percent), Illinois (40 percent), Florida (40 percent), Michigan (38 percent), Rhode Island (34 percent), and Ohio (31 percent).

  • Metro markets with the highest percentage of homes with resurfacing equity (LTV from 90 to 110 percent) included Omaha, Neb., (29 percent), Colorado Springs, Colo., (29 percent), Tulsa, Okla., (29 percent), Little Rock, Ark., (28 percent), and Raleigh, N.C. (28 percent).

  • Nationwide 7.4 million homeowners with a mortgage had 50 percent equity or more, representing 16 percent of all homeowners with a mortgage. Metro markets with the highest percentage of homeowners with at least 50 percent equity included Honolulu (36 percent), San Jose, Calif., (35 percent), Poughkeepsie, N.Y. (30 percent), Pittsburgh (29 percent), San Francisco (29 percent), and New York (27 percent).

Local broker perspectives
"Negative equity will always hamper the housing market from making a strong recovery; however, the amount of homeowners with negative equity is shrinking," said Emmett Laffey, CEO of Laffey Fine Homes International, covering Long Island and the five boroughs of New York City. "New York metro home prices are increasing at a rate of about 1 percent per quarter and thousands of homeowners will now be in a position to sell and take some equity with them post-closing."

"The housing market in Oklahoma City and Tulsa continues to improve, with a majority of homeowners having at least some equity in their homes," said Shel Detrick, CEO of Prudential Detrick/Prudential Alliance Realty, covering the Oklahoma City and Tulsa markets. "If home prices continue to rise, close to one-third of all homeowners in the Oklahoma City metro area will have enough equity to sell their homes in the next year, which is exciting in this inventory-sparse market."

"Due to the increased market demand and low inventory levels we have experienced during much of 2013, negative equity situations have only been noted in isolated circumstances in many areas of Ohio," said Michael Mahon, Executive Vice President of HER Realtors, covering the Columbus, Cincinnati and Dayton markets in Ohio. "This trend will continue to add more buyers and sellers into a positively increasing equity market in months to come, as well as an increased rate of recovery across Ohio for 2013."

"Negative equity certainly impacts a homebuyer's decision to sell, and we expect sellers to come off the fence as prices rise and equity is gained back," said Steve Roney, CEO of Prudential Utah Real Estate. "This will provide added momentum to the recovery as inventories rise and buyers have more options."

"Negative equity continues to be an issue in the Reno-Sparks marketplace, however the situation is improving due to strong price increases," said Craig King, COO of Chase International, covering the Reno and Lake Tahoe markets. "The effect of rising home prices and homeowners with resurfacing equity are both encouraging trends. We believe some of these individuals are starting to show up in our sales activity right now as part of a move-up market. There has been no move up market in the area since 2006 so we are excited about that."

"For the past few years, many people have been unable to sell their homes and upgrade due to lack of equity or in some cases negative equity," said Rich Cosner, president of Prudential California Realty, covering Orange, Riverside and San Bernardino counties in Southern California. "With the tremendous growth in equity over the past year, many homeowners are now able to sell their homes and re-buy, which is a very positive outcome for the real estate market."

"Many homeowners have been predisposed to having negative equity for several years and may not realize that if they put their home on the market at the right price they could sell for a favorable outcome," said Dan Forsman, president and CEO of Prudential Georgia Realty. "The market is starving from a lack of inventory, but as the dial of the housing market moves towards positive and home appreciation continues to climb, there will certainly be an increase in the supply of properties."

Report methodology
The RealtyTrac U.S. Home Equity & Underwater report provides counts of residential properties based on several categories of equity -- or loan to value (LTV) -- at the state, metro and county level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data, and is also matched against record-level foreclosure data to determine foreclosure status for each equity/LTV category.

Definitions
Deeply underwater: Loan to value ratio of 125 percent or above, meaning the homeowner owed at least 25 percent more than the estimated market value of the property.

Resurfacing Equity: Loan to value ratio from 90 percent to 110 percent, meaning the homeowners had anywhere from 10 percent positive equity to 10 percent negative equity.

Equity Rich: Loan to value ratio of 50 percent or lower, meaning the homeowner had at least 50 percent equity.

Foreclosures w/Equity: Properties in some stage of the foreclosure process (default or scheduled for auction, not including bank-owned) where the loan to value ratio was 100 percent or lower.

Click here to view detailed data by state and to learn about RealtyTrac's report methodology.

Report License
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or [email protected].

About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com) is the leading supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac's wholly-owned subsidiary, Homefacts®. RealtyTrac's foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

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