Underwater? Not Any More – Big Decline in Underwater Mortgages
According to CoreLogic, 2.5 million US homes properties in the second quarter of 2013 emerged from being in negative equity to positive equity. Negative equity means that the mortgage balance is higher than the home value commonly referred to as underwater. About 14.5% of all residential properties with a mortgage were still in negative equity at the end of the second quarter but this is down 9.6 million at the end of the first quarter. Currently there’s about 41.5 million homes with negative equity or underwater in the US.
This significant turnaround has been in recovery for about 18 months and property valuations are returning to normal and in some cases exceeding pricing expectations. This is fairly normal though given the recovery state of the economy currently and an increase in home prices.
Mark Twerdok, head of KPMG’s credit risk practice states that “as long as new construction does not change the supply/demand balance in favor of excess supply, appreciation should persist until most of the underwater loans are gone”
One of the largest metropolitan areas in Miami, Miami Beach and Kendall Florida areas, have the highest percentage of mortgaged properties in negative equity at 36.5%. This number is rapidly decreasing as more home buyers inflate the values of properties and more settlers either refinance or stay in their homes. The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For instance, 91% of homes valued at greater than $200,000 and equity compared with 80% of homes valued at less than $200,000. [Source]
we are seeing an increase in home prices and property valuations around the North Naples area over the last 6 to 8 months and will project that home prices and interest rates will continue to rise although somewhat slowly as we head into 2014. Many of these homeowners will find that they no longer have negative equity and are able to sell or refinance for better rates and better prices.
For more information on property prices around Bonita Springs called the Domain Realty Group. [Source]
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