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Percentage of underwater homes declines

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

In the Charlotte-Concord-Gastonia region, 24,807 properties, or 5 percent of mortgaged homes, had negative equity in the latest quarter. That’s down from 30,742, or 6.4 percent of mortgaged homes, a year earlier.

In the fourth quarter of 2015, some 27,725 residences, or 5.7 percent of mortgaged homes, 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.”

The Charlotte area followed the improving national trend, which found that 4 million, or 8 percent of all mortgaged residences, were underwater in the first quarter. That’s down from 10.3 percent a year earlier, and 8.5 percent in the fourth quarter.

“In just the last four years, equity for homeowners with a mortgage had nearly doubled to $6.9 trillion,” said Frank Nothaft, chief economist for CoreLogic, in a press release. “The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment. These are all positive factors that will provide support to both household balance sheets and the overall economy.”

Charlotte has certainly seen a steady appreciation in home prices amid historically low inventory. According to the Charlotte Regional Realtor Association, the average sales price in the region rose 6 percent in April to $251,284 from $237,222 a year earlier.

Property sales rose 3.1 percent in the same period to 3,503. The supply of homes on the market, meanwhile, fell nearly 27 percent from a year ago. That left just a 2.9-month’s supply of available homes for sale, or 10,513 properties.

A supply of six months is considered a balanced market, where neither buyers nor sellers have the upper hand.

CoreLogic says it predicts home prices will increase 5.3 percent nationally over the next year, allowing 1 million homeowners to regain positive equity.

Nevada had the highest rate of underwater properties, at 17.5 percent of homes with a mortgage, followed by Florida, Illinois, Rhode Island, and Maryland. Texas had the highest rate of homes with equity, at 98.1 percent of homes with a mortgage, followed by Alaska, Hawaii, Colorado, and Washington.

The metropolitan area with the highest percentage of underwater homes was Las Vagas-Henderson-Paradise, Nevada, at 19.9 percent of all mortgaged homes.

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