Deeply Underwater Home Supply Decreases

[IMGCAP(1)]

IRVINE, CA-The number of deeply underwater residential properties—worth at least 25% less than the combined loans secured by the property—in the country decreased to 9.3 million in December 2013, down from 10.7 million in September 2013, according to RealtyTrac. This number is also down from the 10.9 million properties that were deeply underwater in January 2013.

A total of 239,470 residential properties actively in the foreclosure process were worth at least 25% less than the combined loans secured by the property, representing 48% of all properties in foreclosure, RealtyTrac reports. That was 60,000 fewer than in September, when there were 299,773 foreclosure properties deeply underwater, representing 56% of all properties in the foreclosure process. Meanwhile, 31% of all residential properties in the foreclosure process had some positive equity, up from 24% with equity in September.

“During the housing downturn, we saw a downward spiral of falling home prices, resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss,” says Daren Blomquist, VP of RealtyTrac. “Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which is in turn giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.”

As GlobeSt.com reported earlier, the institutionalization of buy to rent begs for the creation of a new class of managers and service providers that can scale to meet the needs of these investors, reports RealtyTrac in a recent white paper. The most successful of these players are able to combine the “Main St.” operating capabilities with “Wall St.” analytics to analyze asset efficiency, communicate with sophisticated investors, scour “big data” and stay on top of emerging trends, according to the research firm.

[IMGCAP(2)]

[IMGCAP(3)]