Long Islanders are regaining equity in their homes as the real estate market makes a gradual recovery, a new report shows.
In Nassau and Suffolk counties, 29,473 households — 5.3 percent of those with mortgages — were underwater, meaning they owed more on their mortgages than their homes were worth, according to a third-quarter report released Tuesday by California-based data company CoreLogic. That’s down 1.6 percentage points from a year earlier.
An additional 1.5 percent of homeowners have less than 5 percent equity in their homes, down slightly — 0.3 percentage points — from a year earlier, CoreLogic reported. It could be difficult for those homeowners to refinance their loans, and if they sell their properties, they might not walk away with enough cash to buy another.
In Suffolk County, many homeowners in western communities such as Huntington and Northport are emerging from negative equity as prices rise, said Cynthia McKenna, managing broker at Keller Williams Realty in Hauppauge. It’s a more intractable problem farther east, in Shirley, Mastic and Central Islip, where it’s harder to commute to jobs in New York City, she said.
“Those areas haven’t rebounded as much,” McKenna said. In some cases, homeowners have regained equity, but not enough to fund the costs of selling, she said: “I’ve had probably three closings in the last month and a half where the owners sold, but they had to bring money out of their savings.”
Falling prices during the financial meltdown led to the problem of negative equity. The Long Island median home price hit a peak of $442,380 in the third quarter of 2007 before plummeting to a low of $339,000 in the last three months of 2011, according to reports by the appraisal firm Miller Samuel and the brokerage Douglas Elliman. The figures do not include East End sales, which tend to have higher prices.
But home prices are now rising on the Island, giving a boost to many struggling homeowners.
Long Island homes sold for a median price of $390,000 during the July-to-September period, up 2.6 percent from a year earlier, Miller Samuel and Douglas Elliman reported earlier this year.
Long Island’s emergence from negative home equity mirrors a national trend. Across the country, 4.1 million homeowners — 8.1 percent of those with mortgages — were underwater in the July-to-September period, down 2.3 percentage points from a year earlier, CoreLogic reported.
“Homeowner equity is the largest source of wealth for many Americans,” Anand Nallathambi, president of CoreLogic, said in a statement. Further price gains, he predicted, “will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout next year.”