5.8 Million Homeowners No Longer Underwater – But Not All Markets Rebound

by | BiggerPockets.com

In some positive news regarding the housing market, the U.S. Home Equity & Underwater Report published today by RealtyTrac indicates that “seriously underwater” properties are on a decline from peak levels in 2012. Defined as situations where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value, U.S. residential properties seriously underwater in the fourth quarter of 2014 were at their lowest level since RealtyTrac started to keep record of home equity trends in Q1 of 2012.

The end of 2014 saw 7,052,570 properties — or about 13 percent of all properties with a mortgage — seriously underwater, down from a peak of 12.8 million properties in the second quarter of 2012.

“Median home prices nationwide bottomed out in March 2012 and since then have increased 35 percent, lifting 5.8 million homeowners out of seriously underwater territory,” commented RealtyTrac VP Daren Blomquist.

Screen Shot 2015-01-22 at 4.42.34 PM

Source: RealtyTrac









Related: Do Interest Rates Drive the Housing Market? (Maybe Not As Much As You Think…)

Notable U.S. housing markets where shares of seriously underwater properties dropped below the 10 percent level include:

  • San Jose, CA (2 percent)
  • Denver, CO (4 percent)
  • Portland, OR (5 percent)
  • Minneapolis, MN (5 percent)
  • Boston, MA (5 percent)
  • San Francisco, CA (5 percent)
  • Lost Angeles, CA (6 percent)
  • Pittsburgh, PA (6 percent)
  • Houston, TX (8 percent)
  • Dallas, TX (8 percent)
  • Seattle, WA (9 percent)

A Rise in Positive Equity

The fourth quarter of 2014 also marked another major milestone: Distressed properties — defined as homes in some state of foreclosure — with positive equity outnumbered the share of properties seriously underwater. Whereas only 31 percent of homes a year ago had positive equity (and 48 percent were seriously underwater), 42 percent boasted positive equity by the end of 2014 (and 35 percent were seriously underwater).

Source: RealtyTrac

Source: RealtyTrac









U.S. markets with the highest percentage of distressed properties with positive equity include:

  • Pittsburgh, PA (81 percent)
  • Oklahoma City, OK (76 percent)
  • Austin, TC (73 percent)
  • Nashville, TN (70 percent)
  • San Antonio, TX (63 percent)
  • San Francisco, CA (62 percent)
  • Raleigh, NC (61 percent)

Overall, 20 percent of all properties with a mortgage — or around 11,249,646 U.S. homes — were equity rich by the end of 2014, with at least 50 percent positive equity.

Markets Still Struggling With Underwater Properties

Still, some markets continued to struggle with seriously underwater properties. Areas with the highest percentages of seriously underwater properties include:

  • Las Vegas, NV (30 percent)
  • Orlando, FL (26 percent)
  • Tampa, FL (25 percent)
  • Jacksonville, FL (24 percent)
  • Cleveland, OH (24 percent)
  • Detroit, MI (24 percent)
  • Chicago, IL (22 percent)
  • Atlanta, GA (19 percent)

What Does This Mean for the Housing Market in 2015?

Experts expect to see continued recovery of U.S. markets through the year — however, growth may remain more sustainable and more in line with wage increases.

Related: How To Measure Real Estate Appreciation In Your Housing Market

Said Blomquist, “While the remaining seriously underwater properties continue to be a millstone around the neck of some local markets, the growing number of equity rich homeowners should help counteract the downward pull of negative equity in many markets, empowering those housing markets — and by extension their local economies — to walk on water in 2015.”

Investors: What Do You Think?

  • Are you seeing an increase in equity rich properties in your area?
  • How do you think these trends will affect home buying?
  • How do you think 2015 will go down in the real estate investing books?

Let’s discuss in the comments section below!

About Author

Allison Leung

A career writer, editor and blogger, Allison serves as the Director of Content for BiggerPockets.com. In the past, she has channeled her passion and curiosity for all things real estate into her jobs by working in real estate law and heading a blog about real estate market trends. Don’t ask about her dog, Ace, unless you want to see approximately 500 photos of his (adorable) face.


  1. In my area they are building rental units like nobody has a house. A little disconcerting as they are faster and might be cheaper at fulfilling a need that I had recognized but wasn’t first on the draw with. It is awe inspiring to see a city reconfigured in such short order.
    I had been one of those underwater biding my time renting out houses and selling when time and equity allowed for a fair exchange. What I was reminded of today when you asked the question was nearly drowning as a child and coming to the decision to just breath in, hands reached down and pulled me out of the water. The man who saved me had been waiting for me to raise my head as that was all I would have had to of done to have saved myself. Point of fact; no matter how close to being alright I was, I was as good as dead without his help. Look up you may be alright.
    Thank you Allison and all who allow for every one who doesn’t express themselves without the questions being asked. This also gets me in trouble at times so please know that my intentions are good but I have been known to answer when the wise are still.

  2. Bob E.

    I am leary of the boom in rental housing, eventually this rabbit will work it’s way through the snake and people will move up to buying their homes. When this happens apartments will suffer but people with SFR’s will have the option to sell and realize the gains on their property if they want.

  3. Walter Pape

    I live in the Tampa, FL area and want to be able to solve these problems for these homes. However, I do not know where to start and best course of action. I have the time and passion to create win-wins. Could someone point me in the right direction?

  4. karen rittenhouse

    Wow, this is worse than I thought.

    I had no idea that about 50% of houses with a mortgage have no equity! How horrible for so many homeowners. Just another reason why many of the next generation don’t regard home ownership as an “American Dream”.

    Thanks for the statistics, Allison.

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