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Despite the decrease, CoreLogic noted that home equity remained solid, with the number of properties with negative equity – also known as underwater properties – unchanged from the previous quarter at 1.2 million homes, or 2.1% of all mortgage properties. Year over year, however, the number of homes in negative equity increased by 4% from 1.1 million homes, or 2% of all mortgaged properties.
Borrowers with equity positions near (+/- 5%), the negative equity cut-off, are most likely to move out of or into negative equity as prices change, according to ATTOM. In Q1, 145,000 homes would regain equity if home prices rose by 5%, but if home prices declined by 5%, 213,000 properties would fall underwater.
“While homeowners in some areas of the country who bought a property last spring have no equity as a result of price losses, forecasted home price appreciation over the next year should help many borrowers regain some of that lost equity,” Hepp said.
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