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Local share of underwater homes at 7.7%

CHARLOTTE — The percentage of seriously underwater homes in the metro area remains well below the national average, according to an analysis by RealtyTrac. Some 7.7 percent of mortgaged homes in the Charlotte-Concord-Gastonia region had a loan-to-value ratio of 125 percent or more in the second quarter, meaning the loan amount was at least 25 percent higher than the market value of the property. That’s the same as in the first quarter, and slightly above the 7.5 percent of area homes that were seriously underwater in the fourth quarter.

Across the United States, 13.3 percent of homes with a mortgage were seriously underwater in the second quarter, up slightly from 13.2 percent in the first quarter and 12.7 percent in the fourth quarter.

The share of seriously underwater homes peaked in the second quarter of 2012, at 12.8 million, or 29 percent of those with a mortgage.

RealtyTrac says the 0.1 percentage point national uptick in the latest quarter coincided with declines in home price appreciation.

“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” said RealtyTrac Vice President Daren Blomquist. “However, the share of homeowners with the double whammy of seriously underwater properties that are also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012.”

In the Charlotte area, 15.9 percent of properties facing foreclosure were seriously underwater, while 54.8 percent of distressed homes had equity. In the first quarter, 16.4 percent of properties facing foreclosure were seriously underwater, while 53.9 percent of distressed homes had equity.

Across the United States, 34.4 percent of homes in the foreclosure process were seriously underwater in the second quarter. In the first quarter, that number was 35.1 percent. The portion of homes in foreclosure with some equity grew slightly to 42.4 percent from 42.1 percent in the same period.

RealtyTrac says the biggest change in the equity landscape nationwide occurred among property owners with at least 20 percent of equity in their homes. That category saw a net decrease of some 900,000 in the first half of the year. Blomquist says that indicates that some homeowners who have garnered substantial equity from home price appreciation over the past several years are leveraging their gains into higher loan-to-value refinancing, moving up to higher-priced properties, downsizing into cash purchases or exiting the market.

“Those homeowners cashing out of homeownership altogether would explain why the nation’s overall homeownership rate continued to decline in the second quarter even as homeownership rates among millennials increased,” he said.

Meanwhile, the number of U.S. mortgaged homeowners with at least 50 percent equity ebbed to 19.6 percent, down from was 19.8 percent in the first quarter and 20.3 percent in the fourth quarter. In the Charlotte area, that figure dropped slightly to 14.4 percent from 14.6 percent in the first quarter and 15.2 percent in the fourth quarter.

Other highlights from the report:

  • States with the largest share of mortgages that were seriously underwater in the second quarter were Nevada, at 25 percent; Illinois, at 23.7 percent; Florida, at 23.6 percent; Ohio, at 21 percent; and Michigan, at 20.2 percent. In North Carolina, 11.1 percent of mortgages had a loan-to-value ratio of 125 percent or more.

  • Markets where the share of distressed properties having positive equity exceeded 60 percent included Denver, at 83.7 percent; Austin, Texas, at 83.1 percent; Honolulu, at 77.5 percent; San Jose, California, at 77 percent; and Pittsburgh, at 75.9 percent.

  • Markets with the largest percentage of equity-rich homeowners – those with at least 50 percent equity – included San Jose, California, at 43.8 percent; San Francisco at 38.3 percent; Honolulu at 36.7 percent; Los Angeles, at 32 percent; and New York, at 30.7 percent. Each of these cities has experienced significant home price appreciation.

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