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Fewer Fla. foreclosure homes ‘seriously underwater’

IRVINE, Calif. – Jan. 28, 2016 – RealtyTrac’s Year-End 2015 U.S. Home Equity & Underwater Report finds a drop in the number of Florida homes that are “seriously underwater” – ones that owe at least 25 percent more on mortgages than the current value of their home.

At the end of 2015, one in five mortgage homes (19.8 percent) in the state were seriously underwater. One year earlier, it was one in four (24.7 percent). A significant part of that drop occurred in in the last quarter of the year: In the third quarter, 23.2 percent of Florida homes with a mortgage were seriously underwater.

On the flipside, more Florida homeowners became “equity rich” in 2015 – homes with at least 50 percent equity. The year ended with 20.7 percent of homes equity rich; a year earlier, it was 17.5 percent.

In a look at metro areas, two Florida cities ranked in the top five for their share of seriously underwater properties. Lakeland ranked second (24.4 percent of all mortgage homes seriously underwater) after Las Vegas; Orlando ranked fifth with 22.2 percent.

Two Florida cities also make RealtyTrac’s top-five list specific to foreclosure properties that are seriously underwater. Lakeland ranks third (46.1 percent) after Las Vegas and Chicago, and Deltona-Daytona Beach-Ormond Beach ranks fifth (44.9 percent) after No. 4 Cleveland.

“The equity in South Florida homeownership continues to grow with our rising prices,” says Mike Pappas, CEO and president of Keyes Company in the South Florida market. “Distressed homeowners who are underwater still have options – working through a short sale – usually receiving some cash for moving or utilizing the advantageous HARP refinancing vehicle. ”

National foreclosure numbers

Nationwide, one in 10 of homes with a mortgage (11.5 percent) was seriously underwater at the end of 2015. That number is a drop from 12.7 percent at the end of the third quarter and 12.7 percent year-to-year.

“Over the past three and a half years, the number of seriously underwater properties has been cut in half,” says Daren Blomquist, vice president at RealtyTrac. “But we continue to deal with a long tail of seriously underwater properties, and it will likely be another five years at least before most of those remaining underwater properties move into positive equity territory.”

At the end of 2015, one in four U.S. homes with a mortgage was equity rich (at least 50 percent equity) – 22.5 percent of all properties with a mortgage. The number of equity rich properties at the end of 2015 was 19.2 percent of all properties with a mortgage compared and 20.3 percent at the end of 2014.

In a look at only homes in foreclosure at the end of 2015, 49.7 percent had some equity – the highest percentage since RealtyTrac began compiling the data in 2013. The percentage is an increase from 43.3 percent in the third quarter of 2015 and 34.6 percent year-to-year.

© 2016 Florida Realtors®