Fast-paced price increases have helped bring many underwater homeowners who owed more on their home's than they were worth back to positive equity. In the third quarter, 1.4 million homeowners rose to the surface as their home values once again outranked their equity, this according to Zillow's recently released Negative Equity Report.
The national negative equity rate fell at its fastest pace ever in the third quarter and was the largest on Zillow’s record, which dates back to the second quarter of 2011.
The negative equity rate now stands at 21%, down about one-third from its peak of 31.4 percent and from 23.8% in the second quarter, according to Zillow.
“Rising home prices and a greater willingness among lenders to engage in short sales have both contributed substantially to the significant decline in negative equity this quarter,” said Stan Humphries, chief economist at Zillow.
“We should feel good that we’re moving in the right direction and at a fast clip,” Humphries said.
However, with analysts—including Humphries-- predicting moderating price gains in the coming year, that “fast clip” is expected to decline in the years ahead as home appreciation begin to level off and return to more sustainable historical averages.
In fact, Humphries says negative equity will remain a persistent trait of the housing market and become “part of the new normal” for several years.
Negative Equity Down, But Not Out
While 4.9 million homeowners have risen from their negative equity positions since the bottom of the market in 2011, one in five homeowners with a mortgage remains underwater today. That’s about 10.8 million homeowners currently in a negative equity position.
The “effective” negative equity rate is even higher at 39.2% in the third quarter. The “effective” rate includes all homeowners who have less than 20% equity in their homes. This rate is significant because selling a home and purchasing a new one requires an equity stake of approximately 12% to comfortably meet related expenses.
More than half of underwater homeowners are underwater by at least 20%. Assuming Zillow’s estimated 3.8% increase for average home price growth over the next year, it will take a homeowner with 20% negative equity five years to rise to the surface.
If you’re facing foreclosure you’re facing some very important decisions. We want you know you’re not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington
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In fact, Humphries says negative equity will remain a persistent trait of the housing market and become “part of the new normal” for several years.
Negative Equity Down, But Not Out
While 4.9 million homeowners have risen from their negative equity positions since the bottom of the market in 2011, one in five homeowners with a mortgage remains underwater today. That’s about 10.8 million homeowners currently in a negative equity position.
The “effective” negative equity rate is even higher at 39.2% in the third quarter. The “effective” rate includes all homeowners who have less than 20% equity in their homes. This rate is significant because selling a home and purchasing a new one requires an equity stake of approximately 12% to comfortably meet related expenses.
More than half of underwater homeowners are underwater by at least 20%. Assuming Zillow’s estimated 3.8% increase for average home price growth over the next year, it will take a homeowner with 20% negative equity five years to rise to the surface.
Metropolitan Area
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Q3 2013: % of Homeowners w/Mortgages in Negative Equity
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Peak Negative Equity Rate
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Peak Quarter
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# of Homeowners Freed from Negative Equity Since Peak
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Columbus
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22.8%
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34.4%
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Q4 2011
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40,940
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If you’re facing foreclosure you’re facing some very important decisions. We want you know you’re not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington
Connect with us
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