Monterey Peninsula Real Estate Reality Check - August, 2013
Leaving More Monterey Peninsula Home Owners in a position to Sell
Rising home prices over the past couple of years are reducing the number of homeowners who are “underwater” in their mortgage, bringing more potential sellers off the sidelines to take advantage of the robust housing market.
That’s good news for hundreds of thousands of homeowners across the country, but the trend also provides relief for many frustrated buyers who have been fighting over the limited inventory of homes on the market.
Being “underwater” or “upside down” on a mortgage means that homeowners owe more on their loans than their properties are worth – often referred to as having “negative equity.” The result is that these homeowners can find it extremely difficult to sell their property, especially if they’re trying to buy another home.
Underwater mortgages grew during the recession and the housing downturn. According to CoreLogic, which tracks underwater mortgages nationwide, more than one out of every four homeowners nationwide owed more on their home than it was worth in 2010.
But that trend is changing quickly, and homeowners who thought they were underwater might be surprised to learn they no longer are.
“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity,” said Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity.”
Dr. Fleming called the decline in underwater mortgages “a virtuous circle” in a recent Associated Press article. “The fact that house prices have increased so dramatically ... has unlocked a lot of that pent-up supply,” he said.
According to CoreLogic, at the end of March, 19.8 percent of the nation’s mortgaged homes were underwater, down from 23.7 percent a year earlier and 25 percent during the same period of 2011.
The improvement has been seen in every region of the country, although it varies by location. While some states and cities are doing much better than average, others that experienced the strongest price increases and sharpest drop-off during the recession have a higher percentage of underwater mortgages.
California as a whole is slightly above the national average with 21.3 percent of homeowners having negative equity. But that’s down sharply from 30.5 percent just a year ago. The Bay Area was 22.6 percent in the first quarter, while the Sacramento metro area was 25.8 percent, although both regions have seen a drop in over the past year.
How do we compare with the rest of the country? Here are some findings:
Nevada had the highest percentage of mortgaged properties in negative equity during the first quarter of the year at 45.4 percent, followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5 percent).
On the other end of the spectrum, Montana had the highest percent of homeowners with positive equity at 94.4 percent, followed by North Dakota (94.1 percent), Alaska (93.9 percent), Texas (92.8 percent), and Wyoming (92.6 percent).
Of the largest 25 metropolitan areas, Tampa-St. Petersburg-Clearwater, Florida had the highest percentage of mortgaged properties in negative equity at 41.1 percent, followed by the Miami area (40.7 percent), Atlanta (34.5 percent), Chicago (34.2 percent) and the Warren-Troy-Farmington Hills, Michigan metro area (33.6 percent).
The inventory of homes for sale across the country has fallen over the past year. According to the National Association of Realtors®, there was a 5.2-month supply of existing, single-family homes for sale in May, compared to 6.4 months a year earlier. And inventory is even lower in many of our Bay Area communities.
So if you’ve been thinking about selling your home, this may be a good time to make your move and take advantage of this strong seller’s market. Your home may have more equity than you think. I’m ready to answer any questions you may have about selling your home and the best ways to get the most for your property. Give me a call and we’ll get started today.Mark BrunoMonterey Peninsula Home Teammark.firstname.lastname@example.org(831) 626-2277