Hooray: Consumers Have Equity in Their Homes Again

The housing market's massive downturn several years ago took a significant toll on homeowners nationwide, and some are only now finally recovering from it. However, that number grew significantly in the fourth quarter of last year.

Between October and December, 2012, some 200,000 consumers who had previously been underwater on their home loans were able to get out from under their negative equity, according to the latest data released by the real estate tracking firm CoreLogic. That was down slightly from the average number added to the rolls of those with positive equity in each of the previous three quarters of the year, but brought the annual total to about 1.7 million who brought their mortgages right side up in 2012. At the end of the year, about 38.1 million people nationwide had positive equity on their mortgages.

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However, despite these improvements, 10.4 million people across the country -- accounting for 21.5 percent of all homeowners -- were still underwater on their mortgages at the end of last year, the report said. That was down from 12.1 million at the start of 2012, though.

Further, the national aggregate value of total negative equity slipped to $628 billion, a decline of $42 billion from the $670 billion observed at the end of the third quarter, and in general these improvements were driven by increasing home prices nationwide, the report said. Now, about 38.1 million residential properties nationwide are not underwater, though it should be noted that of that group, 11.3 million have less than 20 percent equity, and 2.3 million have 5 percent or less. That latter group is considered to be at high risk for slipping back underwater if price improvements do not continue in the near future.

"The scourge of negative equity continues to recede across the country," said Anand Nallathambi, president and chief executive officer of CoreLogic. "There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen. The trend toward more homeowners moving back into positive equity territory should continue in 2013."

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Experts believe home prices will continue rising at least through the end of this year, though likely not at the rates seen over the previous 12 months, because many consider those to be unsustainable overall. Nonetheless, these continued (if somewhat diminished) improvements should lead even more homeowners to get out from under their negative equity by the end of 2013.

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