Most homes to begin building positive equity by late 2015
The typical U.S. homeowner in a negative equity position will begin to build positive home equity by late 2015 or early 2016, according to a forecast by First American CoreLogic. In some depressed markets, typical borrowers with negative equity may not experience positive equity until 2020 or later, according to the report. Research conducted by First American CoreLogic indicates more than 11.3 million, or 24 percent, of all residential properties with mortgages, had negative equity at the end of the fourth quarter of 2009.
Although house price appreciation will, over time, offset negative equity, in most cases, amortization will be a more significant remedy to negative equity. According to the report, over the next 10 years, the average loan balance will decrease by an annual rate of 3.3 percent, while home price are expected to increase at a three-percent annual rate over the next decade.
Read the paper here at CoreLogic.