Fewer borrowers nationwide owe more on their mortgages than their homes are worth, providing a boost to the housing recovery, according to a new report.
Roughly 200,000 borrowers escaped their “negative equity” positions during the final three months of last year, real estate data provider CoreLogic said Tuesday. During all of last year, 1.7 million residential properties moved from negative to positive equity.
Overall, the nation’s negative equity fell from $670 billion in the third quarter to $628 billion at the end of last year, CoreLogic said.
A shortage of houses on the market has pushed up home prices in many markets. But the supply could increase, cooling price increases, if more homeowners escape negative equity positions and regain the option of selling.
“The scourge of negative equity continues to recede across the country,” CoreLogic Chief Executive Anand Nallathambi said in a statement. “With fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen.”
The inability of homeowners to sell and move — say, for a better job — also places a drag on the overall economy.
Nationwide, 10.4 million homes, or 21.5 percent of all homes with a mortgage, remain in negative equity.
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