The number of Michigan homeowners 'seriously' underwater on their mortgages ticked up slightly in the last few months.
To be ‘seriously' underwater on a mortgage, the amount owed should be at least 25% more than the estimated market value of the home.
Realty Trac says, in Michigan in the 2nd quarter of 2015, 20.2% of mortgages are considered to be ‘seriously’ underwater. In the first quarter, the number was 19.9%. Nationally, 13.3% of mortgages are ‘seriously’ underwater.
On the positive side, Michigan’s number is down from 27.2% a year ago and down from 56% in the first quarter of 2012.
“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13% of all properties with a mortgage,” said Daren Blomquist, vice president at Realty Trac. “However, the share of homeowners with the double-whammy of seriously underwater properties that are also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012.”
Realty Trac also notes a decline in the percentage of homeowners that are ‘equity rich’. ‘Equity Rich’ is when a homeowner has at least 50% equity in their home.
In Michigan, 15.8% of homeowners qualified as ‘equity rich’ in the second quarter of 2015 compared with 17.4% in the first quarter of the year.
Blomquist suggests homeowners may be taking advantage of their equity.
“Some are leveraging that equity into to refinance or a move-up purchase, some may be downsizing into an all-cash purchase and some may be cashing out of homeownership altogether,” says Blomquist, “Those homeowners cashing out of homeownership altogether would explain why the nation’s overall homeownership rate continued to decline in the second quarter even as homeownership rates among millennials increased.”