Real Estate Marketing & Beyond
An article in aol.com has highlighted the fact that the most affordable homes in the United States are less likely to be for sale. These are the types of homes most suitable for first-time buyers.
They're less likely to be on the market as their current because their current owners have underwater mortgages or negative equity. This is where homeowners owe more on their mortgages than their homes are worth and makes it extremely difficult to list the property and sell it without opting for a short sale or using savings. According to the Zillow Negative Equity Report, just under a third of people whose property falls into the lower third of home values were in negative equity during the first quarter of this year. This is nearly 3 times as many when compared to homes falling into the top third value. Some 18.1% of homeowners with property valued in the middle tier were in negative equity during this quarter.
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Overall the negative equity figures for the nation dropped by 18.8% during the first quarter and there are nearly 9.7 million homeowners whose mortgage is underwater. This means more than a third of homeowners with a mortgage currently have negative equity and cannot sell their property leaving enough profit for selling expenses and closing costs, let alone enough for another down payment.
Real estate experts point out that the stark reality is that the housing markets will be held back due to the high numbers of people with negative equity for years to come. This is particularly bad news as it's affecting property at the lower end of the market which would typically be bought by first-time buyers. High levels of negative equity reduce the amount of available inventory which helps to drive home prices up. While this might be good news for those with underwater mortgages, it does mean those homes that are available become much less affordable.
Negative equity rates are falling and have dropped for eight consecutive quarters. However this recent drop was the lowest pace seen in nearly 2 years as home value growth has slowed. During the first quarter of 2013 negative equity fell from 25.4%, to 19.4% in the fourth quarter, while home value growth slowed down to 5.7% during the first quarter, compared to 6.6% at the end of the fourth-quarter last year. It is expected that the national negative equity rate will fall to 17% by the first quarter of 2015.
