Rising home values in the Wichita area during the third quarter continued to improve the situation of homeowners who were “underwater” – owing more on the mortgage than the home is worth – according to national real estate analysis firm CoreLogic.
In the Wichita area, the owners of 3,932 properties, or about 4 percent of properties with a mortgage, still owe more than the property is worth. Additionally, owners of another 1,870 residential properties, 1.9 percent of homes with mortgages, had less than 5 percent equity.
That’s an improvement over the second quarter, when 4,203 properties, or 4.3 percent of all mortgaged properties, were underwater, and 2,057 had less than 5 percent equity.
The number of homes underwater has dropped pretty dramatically during 2013. CoreLogic said that 7,382 homes that were underwater in the fourth quarter of 2012, nearly twice the amount of the most recent quarter.
The average price of Wichita homes rose 1.5 percent during 2013, according to the Center for Real Estate at Wichita State University.
Having underwater properties concerns economists and those who work in the housing and mortgage sectors – as well as homeowners.
Property owners who don’t build equity in their house are more likely to allow their homes to go into foreclosure.
Underwater situations generally result when loans are made with little or no down payment, as was common in the last decade, and then home values fall.
Nationally, according to CoreLogic, nearly 6.4 million homes, or 13 percent of all residential properties with a mortgage, were still in negative equity at the end of the third quarter. This figure is down from 7.2 million homes, or 14.7 percent of all residential properties with a mortgage, at the end of the second quarter.