According to RealtyTrac, 6.9 million homeowners were seriously underwater (owing at least 25% more than the property is worth) at the end of Q3 2015. That’s down from a peak of around 12.8 in 2012. Nearly half a million of those were lifted from being seriously underwater at the end of last year!
As homeowners regain equity, they have many more options. After being sidelined by low prices and a poor housing market, many homeowners are now choosing to leverage their equity through a refinance or moving up to a different property. Despite the run-up of home prices, many homeowners don’t realize just how much the market—and their situations—have improved. After so many years of bad news, many quit paying attention to news about the housing market.
But the reality is, homeowners looking to sell today are in an excellent position! Today’s Market Is Much More Stable As mentioned previously, home prices skyrocketed in the first year of the recovery. Tight inventory and high demand pushed prices up and up. With home prices soaring, many homeowners chose to wait to sell until price increases reached more normal levels. Last year, home prices grew more slowly, and experts believe that trend will continue this year as well.
Mortgages rates will likely increase this year, and more single-family homes, especially newly constructed homes, will hit the market this year. Increasing mortgage rates should dampen demand some, and coupled with more inventory, supply-and-demand should balance.2 And while home prices may not increase as quickly this year, more homeowners will still join the three million that have already regained equity.
If you found yourself struggling during the housing crisis, it’s important to reevaluate your situation. Chances are, your situation has improved more than you think. It’s a Seller’s Market The market may be balancing, but we are not there yet. Low inventory and high demand continues in many markets nationwide, placing a lot of power in the hands of sellers. In general, the housing market needs a six-month supply of inventory. This means that at the current sales pace, it would take six months to sell all of the homes on the market.
However, over recent months, the supply has remained low—between four to five and a half month’s worth—because there are fewer new homes available and many homeowners are still holding out on selling their homes. At the same time, more and more people are looking to buy a home. Interest rates have remained at near historic lows, making homes very affordable.
With low inventory and high demand, buyers are forced to compete over the available properties, allowing sellers to sell their homes faster and for more. It’s Also a Great Time to Buy!
What makes today’s market so unique is it is also an amazing time to buy. Mortgage rates have remained at near historic lows, allowing buyers to afford much more home.
Do you know what your home is worth today? Chances are, the answer has changed significantly. Knowing your specific situation will help you make more informed choices going forward. As a real estate agent and Certified Distressed Property Expert (CDPE), I make it my business to have the most up-to-date information and can help you understand exactly what your current situation is. If you have been underwater, it is entirely possible you are not anymore. If you have been holding off until the market started to recover, that time is now. Contact me today for a free valuation of your home and let me help you determine your best option!