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Negative Equity Decreased by $12 Billion from Q4 2014 to Q1 2015

More Than 1.2 Million Properties Regained Positive Equity Over the Past Year

Molly Boesel    |    Property Valuation

According to the CoreLogic Equity Report, released today, the nationwide negative equity share decreased from 10.8 percent in Q4 2014 to 10.2 percent in Q1 2015, and the number of underwater borrowers (those in negative equity) decreased from 5.4 million to 5.1 million. Negative equity totaled $337.4 billion in Q1 2015, down $11.7 billion from Q4 2014.

Quarter over quarter, 33 states had decreases in the negative equity share as of Q1 2015. Figure 1 shows the 25 states with the largest percentage-point change in the negative equity share from the previous quarter. New Mexico had the largest increase, up 1.4 percentage points from Q4 2014. Idaho had the largest decrease, down 1.9 percent from the previous quarter.

Figure 2 shows the 10 Core Based Statistical Areas (CBSAs) with the largest dollar amount of negative equity. Chicago had the highest total of underwater value as of Q1 2015 at $18 billion, followed by New York and Los Angeles at $16 billion and $9 billion, respectively. Of the 10 CBSAs shown in Figure 2, seven have negative equity shares above the national share of 10.2 percent.

10 CBSAs with the largest dollar volume of negative equity

10 CBSAs with the largest dollar volume of negative equity

Also according to the latest CoreLogic analysis, mortgage default rates1 fell slightly in Q4 2015. Nationally, homes with positive equity had a default rate of 0.5 percent and homes with negative equity had a default rate of 2.8 percent.

Negative equity shares show stark differences when broken out by price tiers. Trends suggest there is a high concentration of negative equity mortgages in the low end of the housing market. For example, homes valued at less than $100,000 had a negative equity share of 21.5 percent in Q1 2015, which is more than twice the national share of 10.2 percent. Homes valued between $100,000 and $200,000 had the second highest negative equity share at 13.1 percent. On the other end of the scale, homes valued at more than $200,000 had only a 5.9 percent negative equity share, but accounted for 56 percent of negative equity dollars nationwide.

[1] Default rates are calculated by dividing the number of properties in a group for which a Notice of Default (NOD) has been issued by the total number of properties in the specific cohort group. The result is the default rate for the cohort.

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