Mississippi ends Q2 with 18.3% of home mortgages underwater; another 6.2% at risk of falling there

Nearly one in four Mississippi homeowners ended the second quarter owing more on their homes than the homes are worth, California-based real estate survey and data analysis firm CoreLogic reports.

While Mississippi showed a negative equity rate of 18.3 percent for the quarter, home mortgages underwater nationally decreased to 14.5 percent from the previous quarter’s 14.56 percent, CoreLogic reports.

In its national survey, CoreLogic found that about 2.5 million more residential properties returned to a state of positive equity during the second quarter, and the total number of mortgaged residential properties with equity currently stands at 41.5 million. The analysis shows that 7.1 million homes were still in negative equity at the end of the quarter. The first quarter ended with 9.6 million homes, or 19.7 percent of all mortgaged residential properties, with mortgages underwater.

The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 91 percent of homes valued at greater than $200,000 have equity compared with 80 percent of homes valued at less than $200,000, CoreLogic notes.

Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

In assessing whether a mortgage is underwater, analysts look at loan-to-value ratios, with a ratio of 80 percent of below deemed comfortably free of underwater risk. For Mississippi, slightly more than half – or 50.6 percent – of the state’s 49,000 mortgages ended the second quarter with loan-to-value ratios of zero to 80 percent. Statewide, home mortgage loans averaged a loan-to-value of 75 percent.

While 18.3 percent of Mississippi mortgages slipped underwater in Q2, another 6.2 percent ended the quarter dangerously close to falling underwater with loan-to-value ratios of from 95 percent to 100 percent.

An improvement in home prices kept the number of underwater mortgages from climbing yet even higher. Mississippi home prices rose 2.2 percent in July compared to July 2012. Remove the sale of distressed homes – those under foreclosure or close to foreclosure – and Mississippi home prices showed an increase of 3.9 percent in July over the previous year.

CoreLogic ranked Mississippi’s rate of home value increases at 45 nationally. Nevada showed the highest rate of increase at 27 percent, while Delaware had the weakest, with an actual decline in prices of 1,3 percent, CoreLogic reports.

Nationally, home prices rose 1.8 percent in July over the previous month.

Don’t expect improvements in both home prices and equity levels to continue for the remainder of the year, said Mark Fleming, chief economist for CoreLogic. “In just the first half of 2013 almost three and a half million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half.”

Meanwhile, many Mississippi homeowners are struggling to meet their mortgage loan commitments, 6.2 percent of them deemed in “serious delinquency” in July, CoreLogic reports.

 

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