Most Tri-Cities areas in Q3 equity rich class


By DON FENLEY

Q3 richAll but one Tri-Cities jurisdiction in RealtyTrac’s Home Equity and Underwater Q3 Report were in the top equity position – equity rich. And the one area below the national average – Bristol, VA, was almost there.

Nationwide 20% of the homes in the study fit in the equity rich class.  Collectively these homeowners have an estimated $2.9 trillion in positive equity.

Another 16% of the local homes in the report were in the emerging equity class. That means they have between 10 percent negative equity and 10 percent positive equity. Locally four jurisdictions were 1% under the national average, one was at the norm and four more had a higher equity position that the emerging class.

Q3 emergingThe report’s third equity position – seriously underwater – is the one that gets the most attention. Nationwide it was 15% of the properties in the study. These 8.1 homeowners had an estimated $1.4 million in negative equity. Here in the Tri-Cities Two jurisdictions had a higher percentage of negative equity mortgages, one was at the national average and six had lower positions.

The third quarter negative equity numbers were down to the lowest level since RealtyTrac began reporting negative equity in the first quarter of 2012. The report defines seriously underwater as those with a 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.

Q3 underwater“The decrease in underwater properties is promising but the estimated $1.4 trillion in negative equity means that the flood waters are not receding as quickly as they were before, corresponding to slowing home price appreciation,” said Daren Blomquist, vice president at RealtyTrac. “Slower price appreciation means the 8 million homeowners seriously underwater could still have a long road back to positive equity.

“We wanted to paint a picture of the typical seriously underwater homeowner and what we found was that homeowners who bought or refinanced during the housing bubble (2004 to 2008), own a home worth less than $200,000, live in the Sun Belt or Rust Belt and live in a Democratic Congressional District were more likely to be seriously underwater,” Blomquist noted. “On the other end, the highest percentages of equity rich homeowners were those who bought or refinanced between 1994 and 1998, those with properties valued at $500,000 or more, live in NY, CA, DC and these folks also tend to live in Democratic Congressional districts.”

A heat map of the report’s finding can be found by CLICKING HERE

Here are some of the study’s  analysis:

Negative equity by loan date

The highest percentage of seriously underwater homeowners were those who bought or refinanced during the housing bubble, from 2004 – 2008.  On the other end, the highest percentages of equity rich homeowners were those who bought or refinanced between 1994 and 1998.

Year Pct Seriously Underwater
2004 22%
2005 32%
2006 40%
2007 35%
2008 25%
2009 13%
2010 10%
2011 8%
2012 7%
2013 9%
2014 10%

 

Equity by estimated value

The highest percentages of seriously underwater homeowners were found at the low end, with homes worth under $200,000. Conversely, homes worth over $500,000 had the lowest percentage of seriously underwater loans and had the highest percentage of equity rich properties.

 

Estimated Value Pct Equity Rich Pct Seriously Underwater
Less than $50,000 10% 55%
$50,000 – $100,000 13% 34%
$100,000 – $200,000 15% 17%
$200,000 – $300,000 19% 11%
$300,000 – $400,000 23% 8%
$400,000 – $500,000 26% 7%
$500,000 – $750,000 31% 6%
$750,000 – $1M 39% 5%
$1M – $2M 44% 6%
$2M – $5M 48% 9%

 

Financial institutions with the highest amount of homes seriously underwater

As of the end of the third quarter there were 23,702 seriously underwater loans that were originated by Wells Fargo, the most of any loan originators. Following closely is the Bank of America with 20,784 seriously underwater loans. Rounding out the list are government entities (Fannie Mae, Freddie Mac and FHA combined) with 18,094, U.S. Bank with 17,932 and Chase with 13,664 seriously underwater loans.

 

Financial Institution Number of Loans Seriously Underwater Pct Seriously Underwater
Wells Fargo 23,702 21%
Bank of America 20,784 24%
Government 18,094 17%
US Bank 17,932 27%
Chase 13,664 20%

 

 

 

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