4 million homeowners climb out of negative equity

More owners transitioned from negative equity into positive territory last year, a good sign for the economy overall. But many remain underwater on their mortgages.
 By Kenneth R. Harney WASHINGTON — The economy may be growing at a frustratingly slow pace, but one piece of it is booming: American homeowners' equity holdings — the market value of their houses minus their mortgage debts — soared by nearly $2.1 trillion last year to $10 trillion. Big numbers, you say, and hard to grasp. But look at it this way: Thanks to rising prices and equity levels, about 4 million owners around the country last year were able to climb out of the financial tar pit of the housing bust — negative equity. Negative equity gums up people's lives and the real estate marketplace as a whole. It makes it difficult or impossible for many owners to refinance out of a higher-cost mortgage into a more affordable one. It makes it painful to sell — you've got to bring cash to the table to pay off what you still owe to the bank. Plus almost no one wants to lend you money, at least not at reasonable interest rates secured by your real estate, when you're deeply underwater. So you're likely to spend less and invest less, and you're probably not going to buy another house. Nor will potential new buyers be able to purchase yours. So when 4 million owners manage to transition out of negative equity into positive territory, that's significant news not just for them personally, but for the economy overall. Two statistical studies released this month offered a glimpse of where the country is in terms of homeowner equity, seven years after real estate began to tumble and crash. The first was the Federal Reserve's quarterly "flow of funds" report. Among many other segments of the economy it toted up, the Fed found that homeowner equity has rebounded to its highest level in eight years — though it's still not quite back to the $12 trillion it was during the hyperinflationary high point of the housing boom in 2005. The second study, from real estate analytics firm Core Logic, focused on the flip side — the impressive shrinkage of negative equity. According to researchers, nearly 43 million owners with mortgage debt have positive equity. Roughly 6.5 million owners are still in negative equity positions, however, down from more than 10 million a year ago and 12 million in 2009.
 Please remember you can search for homes at www.CallTheHouseMan.com.