CoreLogic: Underwater mortgages in metro area decline to 16%
IN THE FIRST quarter of 2014, 16 percent of all residential properties in the Providence-Warwick metro area registered negative equity, a decline from 17.4 percent in the fourth quarter last year. Statewide, Rhode Island’s first-quarter share of negative equity and near negative equity was the 10th largest in the country, at 20.1 percent.
PROVIDENCE – The number of residential properties in the Providence-Warwick metro area in negative equity fell to 56,608 in the first quarter, representing 16 percent of all residential mortgages, compared with 17.4 percent or 61,424 properties in the fourth quarter of 2013, according to a CoreLogic report released Thursday.
Negative equity, also referred to as “underwater” or “upside down,” means that the borrower owes more on the mortgage than the home is worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
In the Providence-Warwick region, an additional 3.1 percent, or 11,018 residential properties, were in near negative equity for the first quarter, a slight drop from the 3.3 percent, or 11,670 properties, in near negative equity for the previous quarter.
Nationally, 12.7 percent of all residential properties with a mortgage, or 6.3 million homes, were still in negative equity at the end of the first quarter, a decline from 13.4 percent, or 6.6 million homes, at the end of the fourth quarter last year.
More than 1.5 million homes were in near negative equity nationwide in the first quarter, roughly 3.2 percent of all mortgages.
“Prices continue to rise across most of the country and significantly fewer borrowers are underwater today compared to last year,” said Anand Nallathambi, president and CEO of CoreLogic. “An additional rise in home prices of 5 percent, which we are projecting will occur over the next 12 months, will lift another 1.2 million properties out of the negative equity trap.”
The national aggregate value of negative equity was $383.7 billion at the end of the first quarter of 2014, compared with $400 billion the quarter prior, a decline of $16.9 billion.
Statewide, Rhode Island’s share of negative and near negative equity was the 10th largest in the country, at 20.1 percent. Of the 232,791 total mortgages in the state, 46,787 were in negative equity or near negative equity in the first quarter.
Massachusetts ranked 26th among the U.S. states, with 13.1 percent, or 198,928, of the 1.5 million mortgages in the state either in negative equity or near negative equity.