Real Estate Marketing & Beyond
During the second quarter of this year, nearly 950,000 homes went back into positive equity. This now means the total number of residential properties with equity is now 44 million.
The level of borrower equity in the United States rose by approximately $1 trillion during the second quarter of 2014, compared to the previous year. In comparison the number of homes in negative equity during the second quarter of last year was 14.9% or 7.2 million homes. This means the number of homes in negative equity decreased by nearly 2 million or 4.2%.
The article in RisMedia points out that homes with negative equity are sometimes referred to as being upside down or underwater, but all these terms mean the same thing as the borrower owes more on their mortgage than their property is worth. A homeowner can end up with negative equity for a couple of different reasons, perhaps because their mortgage debt has increased, or because the value of their home has declined. Sometimes it’s due to a combination of both factors.
Although 44 million residential properties have positive equity, around 19% or 9 million homes have less than 20% equity or are considered to be under-equitied, and out of these 1.3 million have less than 5% equity, a position that is referred to as being near negative equity. Homeowners who have less than 20% equity may face difficulties when they wish to refinance the loan, or when the time comes to sell and obtain another loan to buy a different property. Those homeowners with less than 5% equity are at risk of moving into negative equity if home prices fall even slightly. On the other hand, home prices only have to rise by another 5% to get an additional 1 million homeowners out of negative equity.
Experts point out that the increase in the number of homes in equity is a sure sign things are moving in the right direction, and it’s a factor that helps boost the overall economy. It is expected that as levels of equity continue to increase, home ownership will become more attractive to greater numbers of people. In addition there should be increased opportunities for homeowners to sell their property, or to refinance an existing loan.
During the second quarter of 2014, Fannie Mae and Freddie Mac prevented nearly 80,000 homes from falling into foreclosure, meaning the total number of foreclosures prevented since September 2008 is now 3.3 million.
Right. This is all wonderful until these homeowners try to sell and discover that the media and NAR have been misrepresenting this "recovering" market. 2014 has been a sliding year after the dead cat bounce of 12-13 and 2015 will be stable at best. No economic strength, no real estate strength.