The number of homes worth less than their outstanding mortgages fell slightly in the first three months, according to figures released Tuesday by CoreLogic Inc. (NYSE: CLGX), a Santa Ana, Calif.-based real estate data firm.
According to CoreLogic, 27.2 percent — or 13.5 million homes — had negative or near-negative equity in the first quarter. That compares to 27.7 percent in the fourth quarter of 2010.
In Oregon, 17.2 percent of homes are worth less than their mortgages and another 5.8 percent had near-negative equity. Collectively, Oregonians owe $121.9 billion on 696,142 mortgages on properties worth a total of $175 billion.
“The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks,” said Mark Fleming, chief economist with CoreLogic. “Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity.”
Negative equity occurs when a borrower owes more than the home is worth. “Near-negative” refers to homes with less than 5 percent equity, a figure that would be wiped out by transaction costs if the property were sold.
In Washington state, 16.9 percent of homes had negative equity and 5.8 percent had near-negative equity. Collectively, Washingtonians owe $291.7 billion on 1,412,110 mortgages on properties worth a total of $429.1 billion.
Nevada, where 63 percent of all mortgaged homes are worth less than the outstanding loan balance, led the nation for negative equity. The other top five states were Arizona, 50 percent, Florida, 46 percent, Michigan, 36 percent and California, 31 percent. Nevada, Arizona and Florida showed improvement from the prior quarter.
The average “underwater” home is worth $65,000 less than the outstanding mortgage balance.
The U.S. residentialreal estate market experienced a dreaded “double dip” in April, according to Clear Capital, as a leading index dropped below the prior, post-recession market low set in March 2009. Truckee, Calif.-based Clear Capital monitors the residential real estate market. It found that nationwide home prices dropped 5 percent in April compared to one year ago and are down 11.5 percent over the prior nine months, a rate of decline not seen since 2008.
Clear Capital’s Home Data Index for Portland dropped 10.1 percent compared to a year ago while Seattle prices dropped 12 percent in the same period.
Clear Capital also said distressed properties, including foreclosures, represented 34.5 percent of the market in April.
Locally, distressed properties represented 31.1 percent of the Portland market and 27.4 percent of the Seattle market, it said.
“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Alex Villacorta, director of research and analytics. “With more than one-third of national home sales being (distressed), market prices are being weighed down as many markets have not regained enough footing to withstand the strain.”
Clear Data said the nation’s five best markets are Charlotte, N.C., Washington D.C., Tucson, Ariz., Dallas and Philadelphia.
The five worst markets were Detroit, Hartford, Conn., Milwaukee, Wisc., Cleveland and Chicago.
Oregon‘s economy showed continued growth in February, led by employment services payrolls, strong U.S. consumer sentiment and an increase in the interest rate spread.
The University of Oregon Index of Economic Indicators rose 0.7 percent to 91.3 in February from January. The index has a benchmark of 100 set in 1997.
While unemployment claims edged up, they remain well below 2010 levels and overall labor market trends are strong. Employment services payrolls, largely temporary employment, were up 3.2 percent and non-farm payrolls were also up, adding about 9,800 new jobs last month. Since October, the Oregon economy has added about 5,900 jobs each month.
Other Oregon data reflected in the UO Index include:
Initial unemployment claims rose slightly to 8,551 in February, up from 8,487 in January.
Residential permits inched up to 629 from 627.
U.S. consumer confidence rose to 73.1 from 71.2.
New manufacturing orders for non-defense, non-aircraft capital goods dipped to 39,402 from 39,728.
The interest rate spread between for 10-year treasury bonds and the federal funds rate widened to 3.42 from 3.22, a signal of investor confidence in the U.S. economy.
The index has continued to climb since October 2010, when it was 88.9.