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Charlotte-area homeowners regain footing

The number of Charlotte-area homeowners owing more on their mortgages than their homes are worth fell in the second quarter on both an annual and quarterly basis, according to real estate analytics and information provider CoreLogic.

In the Charlotte-Concord-Gastonia region, 25,370 properties, or 5.3 percent of mortgaged homes, had negative equity in the second quarter. That’s down from 32,384, or 6.8 percent of mortgaged homes, a year earlier.

In the first quarter of this year, some 30,360 residences, or 6.3 percent, had negative equity.

Factors that can cause borrowers to fall into negative equity include declining home value and increasing debt loads. Such individuals are often referred to as being “underwater” or “upside down.”

“Home price appreciation and foreclosure completions both reduce the number of homeowners with negative equity, the latter because most homeowners who lost homes through foreclosure had some level of negative equity,” said Frank Nothaft, chief economist for CoreLogic, in a press release.

The Charlotte area followed the improving national trend, which found that 4.4 million, or 8.7 percent of all mortgaged residence, were underwater in the second quarter. That’s down from 10.9 percent a year earlier, and 10.2 percent in the first quarter.

CoreLogic Chief Executive Anand Nallathambi attributes the national easing in negative equity to “the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets.”

That’s certainly true for the Charlotte area, where sales have been steadily rising amid a severe decline in inventory. According to the Charlotte Regional Realtor Association, property sales in August grew 6.4 percent to 3,905 from 3,371 a year earlier, according to data released Thursday by the Charlotte Regional Realtor Association.

The average sales price rose 2.6 percent to $248,502 in the same period.

The supply of homes on the market, meanwhile, fell nearly 22 percent, leaving just a 3.8-month supply of homes for sale, or 13,166 properties. Inventory dropped 2 percent from July 2015, when there were 13,410 properties for sale. A supply of six months is considered a balanced market, where neither buyers nor sellers have the upper hand.

Factors that have hindered supply here include strong migration to the area, a lack of new construction, and stagnant wages that make it difficult for some homeowners to move up to higher-priced residences. Other potential sellers are waiting for home values to appreciate more in order to recoup the equity they lost during the recession.

CoreLogic says it predicts home prices will increase 4.7 percent nationally over the next year, allowing 800,000 homeowners to regain positive equity.

Nevada had the highest rate of underwater properties, at 20.6 percent of homes with a mortgage, followed by Florida, Arizona, Rhode Island, and Illinois. Texas had the highest rate of homes with equity, at 97.9 percent of homes with a mortgage, followed by Alaska, Hawaii, Montana, and Colorado.

The metropolitan areas with the highest percentage of underwater homes were Tampa-St. Petersburg-Clearwater, Florida; Phoenix-Mesa-Scottsdale, Arizona; Chicago-Naperville-Arlington Heights, Illinois; Riverside-San Bernardino-Ontario, California; and Warren-Troy-Farmington Hills, Michigan.

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