A recent report by CoreLogic shows that the trend of rising home prices is reducing the number of U.S. homeowners struggling with negative equity or underwater mortgages. The report indicates that 14.5% of homeowners are dealing with negative equity in their residential properties in the second quarter compared to 19.7% in the first quarter. The number was 22.3% a year ago and 26% in the fourth quarter of 2009!
A rise in negative equity was the direct result of the housing crisis which began five years ago and started a landslide of falling home pricesand values. A positive recovery in this sector over the last year has resulted in a decrease in this issue of property values being less than what is owed on the mortgage. According to the CoreLogic report there were 7.1 million homes with negative equity in the second quarter compared to 9.6 million in the first quarter. Approximately 3.5 million homeowners regaine positive equity in the first haf of the year.
Locally, the Collin County market continues to see rising home values as inventory of available homes remains low. The August numbers provided by NTREIS reflect average home prices rising 24% in Allen, 8% in Frisco, 9% in McKinney and 4% in Planocompared to August 2012. Indications are that this trend will continue as Allen, Plano, and McKinney all have 1.9 months supply of homes available and Frisco is at 2 months supply.
Source: Reuters and NTREIS
Steve Lester is a REALTOR living in Allen, Texas.