Rebounding home prices are lowering the number of home owners who are considered “underwater” on their mortgage, according to a new report by CoreLogic.
More than 700,000 home owners are no longer considered “underwater,” owing more on their mortgage than their home is currently worth.
At the end of March, 23.7 percent — or 11.4 million — of home owners with mortgages were considered underwater on their mortgage, according to CoreLogic’s latest report. Three months prior, that percentage was 25.2 percent, or 12.1 million home owners.
Mark Fleming, CoreLogic’s chief economist, attributes the decrease to recent gains in home prices, a drop in for-sale inventory, and fewer distressed sales, which are all helping more home owners see the values of their houses increase.
About 1.9 million home owners were 5 percent underwater during the first quarter. If prices continue to inch upward, these owners are expected to climb out of underwater territory, according to CoreLogic.
“While the overall stagnating economic recovery will likely slow [the] housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk,” Fleming says.