Hawai‘i Homeowners Near the Top in Equity

97.5 percent of Hawai‘i residences with mortgages have positive equity.

The vast majority of homeowners in Hawai‘i have equity in their properties, despite having some of the highest home prices in the nation.


A new report by CoreLogic, a data and analytics company, found that 97.5 percent of Hawai‘i residences with mortgages have positive equity, only behind Texas (97.9) and Alaska (97.6). Others in the Top 5 include Montana (97.2) and Colorado (96.7).


What does that mean? The higher percentage of homeowners with equity generally means a more stable, healthier housing market overall.


On the flip side, Nevada had the highest percentage of homes with negative equity at 20.6 percent, according to the report. That means 1 in 5 homeowners in the Silver State owe more on their mortgages than their home is worth. Negative equity is often referred to as being “underwater” or “upside down” in a property and can happen when home values drop or when the homeowner takes on more mortgage debt, or a combination of both.


Nevada was followed by Florida (18.5 percent), Arizona (15.4), Rhode Island (13.8) and Illinois (13.1). Combined, these five states accounted for nearly a third of the negative equity in the nation, according to Corelogic.


Being underwater could make it more difficult to refinance, obtain new financing or sell the properties. It could also eventually send the property into a short sale or foreclosure.


Corelogic also reported that 759,000 properties nationwide gained equity in the second quarter, bringing the total number of mortgaged residential properties with equity to about 45.9 million, or 91 percent of all mortgaged properties. Borrower equity increased year over year by $691 billion in the second quarter.


“For much of the country, the negative equity epidemic is lifting. The biggest reason for this improvement has been the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets,” says Anand Nallathambi, president and CEO of CoreLogic.


The company predicts home prices will rise an additional 4.7 percent over the next year in America and, if this happens, 800,000 homeowners could regain positive equity by July 2016.


Frank Nothaft, chief economist for CoreLogic, says “home price appreciation and foreclosure completions both reduce the number of homeowners with negative equity, the latter because most homeowners who lost homes through foreclosure had some level of negative equity."


The total number of mortgaged residential properties with negative equity is now at 4.4 million, or 8.7 percent of all mortgaged properties. This compares to 5.4 million homes, or 10.9 percent, reported in the same quarter last year. The number of underwater homes has decreased year over year by 1.1 million, or 19.4 percent.