The Real Deal Miami

Negative equity lessens slightly in first quarter

June 07, 2011 12:52PM

In the Miami-Miami Beach-Kendall area, 46.6 percent, or 236,103, of all residential properties with a mortgage were in negative equity for first quarter 2011, according to new negative equity data released by CoreLogic for the quarter.

Nationally, 27 percent, or 10.9 million, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter. An additional 2.4 million borrowers had less than five percent equity in the first quarter. Together, negative equity and near-negative equity mortgages accounted for 27.7 percent of all U.S. residential properties with a mortgage. In the previous quarter, these two categories stood at 27.9 percent.

While the average negative equity borrower owed $65,000 more than their home was worth, figures varied widely by state. New York borrowers were upside down by an average of $129,000, the highest average in the nation, followed by Massachusetts, $120,000, and Connecticut, $111,000.

Equity extraction increased the risk of a negative equity position, says the report. While only 18 percent of borrowers with no home equity loans were underwater at the end of the first quarter, 38 percent of borrowers with home equity loans were in a negative equity position. A negative equity borrower without home equity loans is upside down by an average of $52,000, versus an upside down average of $83,000 for a negative equity borrower with home equity.

“The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks,” said Mark Fleming, chief economist with CoreLogic. “Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity.” TRD