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2015 price gains restore equity to 6,600 O.C. homes

By March 11, 2016 No Comments

Jeff Collins

March 11, 2016

 

Rising home values helped lift 6,609 Orange County homes from being “under water” last year, meaning that their

values no longer are less than what’s owed on their mortgages, Irvine-based CoreLogic reported Thursday.

During the fourth quarter of 2015, 12,930 O.C. homes were “under water,” or worth less than their mortgages.

That’s down from more than 19,500 at the end of 2014.

“Higher prices driven largely by tight supply are certainly a big reason for the rise” of homes with equity, said

CoreLogic President and CEO Anand Nallathambi. “But continued population growth, household formation and

ultra-low interest rates are also factors.”

Equity is a property’s value above what’s owed on its mortgage. So if a home with a $500,000 mortgage is worth

$550,000, it has $50,000 in equity.

But if it’s value is just $450,000, it’s under water because the owner owes $50,000 more than it’s worth.

The number of underwater homes soared during the housing crash because prices dropped below what owners

owed their lenders.

At the height of the foreclosure crisis in 2009, 130,000 Orange County homes – more than one out of every five

mortgaged residences – were worth less than their debt, CoreLogic figures show.

In the fourth quarter of last year, however, 2.4 percent of all Orange County homes with a mortgage – fewer than

one in 40 – were under water.

By comparison, 4.5 percent of Los Angeles County’s mortgaged homes were under water in the fourth quarter.

More than 20 percent of homes still are under water in Miami and Las Vegas, two of the hardest-hit communities

in the foreclosure crisis.

But less than 1 percent of the homes on the San Francisco Peninsula were under water in the fourth quarter.

Nationwide, 8.5 percent of homes were under water in the fourth quarter, or 4.3 million U.S. homes, CoreLogic

reported. A million U.S. borrowers regained equity in their homes in 2015.

The real estate data firm reported that 5,274 Orange County homes had less than 5 percent equity at the end of

last year. Even though those homeowners aren’t under water, selling is almost impossible since there wouldn’t be

enough money to pay off the mortgage after closing costs.

Nationally, 1.2 million U.S. homeowners had less than 5 percent equity, CoreLogic reported.

“Looking ahead in 2016, we expect home equity levels to continue to build, which is a good thing for the long-term

health of the U.S. economy,” Nallathambi said.

http://www.ocregister.com/articles/homes-707542- water-equity.html

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