Charlotte homes see drop in negative equity
Courtesy of the Mecklenburg TIMES
By: Roberta Fuchs January 13, 2015
The number of the Charlotte area’s mortgaged homes with negative equity fell to 6.8 percent in the third quarter of 2014 from 8.4 percent in third quarter 2013, according to CoreLogic.
The third-quarter 2014 figure rose slightly, however, from the second quarter of 2014, when 6.7 percent, or 31,652, of the homes in the Charlotte-Gastonia-Concord metropolitan statistical area carried negative equity. In the third quarter, that figure was 32,244 homes.
Negative equity means that borrowers owe more on their mortgages than their homes are worth. The situation can occur because of a decline in real estate value, an increase in mortgage debt, or a combination of both.
The CoreLogic report found that an additional 3 percent of area homeowners with a mortgage in the third quarter had near-negative equity, or less than 5 percent equity in their homes. The number of Charlotte area homes in near-negative equity decreased from the previous year, when 4.1 percent of homeowners with a mortgage had less than 5 percent equity in their properties.
The number of mortgages that were near negative equity in the second quarter of 2014 was 2.9 percent.
John Chesser, senior analyst at UNC Charlotte Urban Institute, says he believes the year-over-year decline in negative and near-negative equity reflects the steady recovery in the overall housing market, and strong growth in the local employment rate, which has boosted Charlotte-area home sales.
“The rise in negative equity during the recession was a natural consequence of the rapid drop in home values,” Chesser said. “Now, lending is tighter, so new home purchases result in a more solid equity position for purchasers and the overall rise in prices is helping reduce the negative equity situation that existing owners have been in over the last few years.”
Nancy Braun, owner and broker-in-charge of Showcase Realty in Charlotte’s South End, agrees. She attributes the drop in negative equity to a strong appreciation in housing prices, which is a reflection of the local economy.
“Plus,” she said, “We still have investors purchasing in the Charlotte-area market, which has bumped up prices as well. Low inventory is also boosting higher offers.”
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