Equity Gains Slow, 15% of Homes Remain in Serious Negative Equity

While many aspects of the market have remained stagnant throughout the year, equity continues to escalate: homeowners across the nation have enjoyed a welcomed $1.6 trillion increase the last year alone. Yet despite this growing figure, a recent study has found that equity gains have recently slowed, and to make matters worse, roughly 15% of homes are still in serious negative equity.

Home-underwater

The Federal Reserve announced in its most recent quarterly report that equity rose throughout the nation by $177 billion, an impressive number in whole but significantly less than the near half-trillion dollar jump from the quarter before, when equity climbed by $452 billion.  With this latest bump, home equity holdings have reached $10.48 trillion nationwide – a significant improvement from the $6.4 trillion recorded as recently as 2011.

One of every three homes has had its mortgage paid off in full, statistics show, and roughly 11 million homeowners have equity stakes of at least 50%.

The recent equity boom was largely driven by the investor-fueled price run-ups of last year and a growing number of homeowners paying off their mortgage principal debts. As a result, the total outstanding mortgage debt across the nation has continued to drop and now resides below its pre-recession 2009 point.

Though equity is still improving, not everyone is in the clear just yet.

Despite the recent bump, approximately 15% of all homes with mortgages are still in what is considered “serious” negative equity – owing 25% or more on a mortgage than what the home’s value. This will continue to be a major hurdle for many homeowners in years to come, as these homes have become far more difficult to resell or refinance.

Has the recent equity boom impacted your business? What needs to change in order to reduce the number of homes in serious negative equity?