Property Valuation: Negative Equity Update Second Quarter 2016

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Negative Equity Share Falls to 7 Percent in Second Quarter 2016

  • The negative equity share fell to 7.1 percent in Q2 2016 from 8.9 percent in Q2 2015.
  • Only Connecticut and North Dakota saw increases in negative equity share over the past year, but the increases were minimal.
  • Negative equity remains low in the oil-patch areas.

The nationwide negative equity share decreased in Q2 2016, falling from 8.9 percent in Q2 2015 to 7.1 percent in Q2 2016. The number of underwater loans (or those in negative equity) fell by about 900,000 loans, from 4.5 million in Q2 2015 to 3.6 million in Q2 2016, according to the latest CoreLogic Equity Report. The total value of negative equity loans, which applies to borrowers who owe more on their mortgages than their homes are worth, fell to $284 billion in Q2 2016, down by $30 billion from Q2 2015.

Negative Equity

Negative Equity

On a year-over-year basis, only Connecticut (+0.2 percentage points) and North Dakota (+0.3 percentage points) registered increases in the negative equity share in Q2 2016. Figure 1 shows the 25 states with the largest percentage-point change in the negative equity share from the previous year. Nevada’s 5.1-percentage-point decrease between Q2 2015 and Q2 2016 represented the largest decline.

Figure 2 shows the average dollar amount of negative equity and the negative equity share for 10 large Core Based Statistical Areas (CBSAs) in Q2 2016. The average amount of negative equity is inversely related to the negative equity share. For example, in this group of CBSAs, Denver has the largest average amount of negative equity, but the negative equity share is only 1.5 percent, and Phoenix has the smallest average amount of negative equity, but has a negative equity share that is well above the national average.

Negative Equity

Negative Equity

Figure 3 shows the negative equity and under-equity (less than 20 percent equity) shares in select oil-patch areas for Q2 2015 and Q2 2016. Negative equity remains low in these areas, with the Texas metropolitan areas all having negative equity shares of 2 percent or less. The under-equity share was highest in Oklahoma, and the under-equity share rose year over year in North Dakota and the Midland and Odessa metro areas in Texas.

©2016 CoreLogic, Inc. All rights reserved.


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