September 11th, 2013
The good news about the United States’ recovering housing market is still not over. The most recent reports show the number of American homeowners who are underwater on their mortgages is declining.
Data from RealtyTrac showed that in the beginning of September, there were 10.7 million people in the nation who owed at least 25 percent or more on their mortgages than their homes were worth. While still a relatively large number, this is great progress from the months prior. For instance, in May, there were 11.3 million homeowners in this position, and 12.5 million in September 2012.
The improvement in this sector of the market is largely thanks to the increasing housing prices throughout the country. This is helping people regain equity on their homes. The more their houses are worth, the less they are underwater.
“Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months,” said Daren Blomquist, vice president of RealtyTrac.
In turn, fewer struggling homeowners means a boost to the U.S. economy, since people underwater are more likely to enter foreclosure or relocate out of a town to seek employment.
Future looking continually bright for the nation’s underwater homes
Fortunately, this upward trend is expected to continue. RealtyTrac’s report noted that there are 8.3 million people who are close to being above water or are balancing the line between positive and negative equity. Analysts expect these millions of American homeowners will gain enough equity to sell their houses by 2015 without having to do a short sale.
“Nearly one in four homeowners [nationwide] in foreclosure has at least some equity, giving them a better chance to avoid foreclosure without resorting to a short sale – assuming their realize they have equity and don’t miss the opportunity to leverage that equity,” Blomquist said.
In fact, the RealtyTrac report estimates 24 percent of homes currently in the foreclosure process around the country have equity.
How the states stack up against each other
Not all areas of the country are doing as well as others when it comes to underwater homeowners. According to RealtyTrac’s research, Nevada, Illinois and Florida had the largest amount of deeply underwater homes, at 46 percent, 40 percent and 40 percent, respectively. Michigan and Rhode Island rounded out the top five.
On the other hand, at 36 percent, Honolulu had the highest percentage of homeowners with equity of at least 50 percent.