With home values falling dramatically from 2006 boom prices, many homeowners have found themselves in what is called a ‘negative equity’ or ‘underwater’ situation. This means the value of their home is currently less than the mortgage amount on that home.
Many of these homeowners have been ‘locked’ into their houses because they were unable to sell it without bringing cash to the closing table. The good news is this situation is improving as prices begin to rise.
We are not saying that this challenge is over. We just have to look at what the experts are saying to realize we still have a long way to go.
Zillow Chief Economist Dr. Stan Humphries recently stated:
“Negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas. As a result, negative equity will remain a major factor in the market for the foreseeable future.”
Anand Nallathambi, CEO of CoreLogic, in their latest Negative Equity Report:
“With nearly one quarter of borrowers still underwater we have a long way to go.”
However, the situation is improving. The recent Zillow Negative Equity Report revealed:
- Negative equity continued to fall in the fourth quarter of 2012, dropping to 27.5 percent of all homeowners with a mortgage, compared with 31.1 percent one year ago.
- Almost 2 million American homeowners were freed from negative equity over the course of the year.
- Approximately 13.8 million homeowners with a mortgage were in negative equity, or “underwater,” at the end of the fourth quarter, owing more on their mortgages than their homes are worth. That was down from 15.7 million in the fourth quarter of 2011.
What does the future hold?
Anand Nallathambi, president and CEO of CoreLogic, sees the situation improving:
“As we look ahead into 2013, we expect to continue to see more borrowers’ escape the negative equity trap and that will be a strong positive for the housing market specifically and the broader economy generally.”
Zillow Chief Economist Dr. Stan Humphries agrees:
“As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets.”
Negative equity is still a challenge to a full housing recovery in this country. However, things will continue to improve as prices appreciate.
Article courtesy of on February 26, 2013.
MacIntyre & Cowen, Short Sale Specialists, RE/MAX Real Estate Professionals Grand River, can help you navigate this process and get your home sold. With the extension of the Mortgage Debt Relief Act until the end of 2013, now is the time to act if you are underwater in your home. We would gladly provide a complimentary Over-the-Net Home Evaluation or email alerts to Hot Buys / Foreclosed / Liquidation & Luxury Distressed Properties in the Mid Michigan areas including Greater Lansing, Haslett, Okemos, East Lansing, Grand Ledge, Holt, Williamston, Mason, Eaton Rapids, Dimondale, Dewitt areas and more. Feel free to contact us at 517.999.2675 or visit us at www.pmachomes.com today!