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Positive Equity by the Numbers: What Investors Need to Know About This Important Market Trend  

In addition to massive foreclosure rates, the aftermath of the real estate market crash of nearly a decade ago also forced many homeowners into a negative equity situation. To make matters worse, many of these homes had been purchased at the very top of the real estate bubble. When it burst, those with sufficient income or resources to avoid foreclosure found themselves suddenly burdened with a home mortgage that far exceeded their home’s newly assigned after market crash value. For many, this meant staying in a home that no longer suited their needs for years longer than their original plan. Those that were forced to move for work or other reasons were likely forced to sell at a loss and cover the difference, or consider riskier options, such as becoming a long-distance landlord or selling to a cash-strapped buyer in a lease-purchase agreement.

On the Gain, Once Again

Negative equity on residential real estate actually saw its peak of 26 percent in the fourth quarter of 2009, shortly after the bubble burst and property values dropped like rocks in the newly devastated real estate market. With slightly more than one in every four homeowners suddenly upside down in their mortgage, property loans of all types experienced significant pain. Recent statistics compiled for 2016, however, offer very positive news for the real estate industry, as a whole, with 93.8 percent of mortgaged homes now having moved into a positive equity position.

 Highlighting the Gains

While home equity gains improved on a national level, the highest levels of gains occurred in areas with higher end markets and faster appreciation rates. According to CoreLogic’s study, Oregon ( with 10.2 percent increase) and Washington (with a 10.3 percent increase) offered the biggest positive equity gains in 2016, approximately doubling the gains experienced in the rest of the nation. Even California, where concerns about droughts, flooding, and wildfire have made the news on a daily basis, experienced a healthy 5.8 percent gain in positive equity figures for residential mortgage holders of the state.

Other states showing positive equity gains as of the fourth quarter of 2016 that are worth noting, especially for those interested in real estate investment loans include:

  • Texas – 98.4 percent ( the state now with the highest percentage of positive equity mortgages)
  • Hawaii – 98.1 percent
  • Alaska, Colorado, Oregon, Utah, and Washington – all tied at 97.9 percent

Negative Equity Still a Factor in Some Metropolitan Areas

While nationwide positive equity gains are good news, some of the nation’s largest metro areas are still experiencing uncomfortably high negative equity numbers. These areas and their negative equity rates for 2016, as determined by the CoreLogic study, included:

  • Miami (including Miami, Miami Beach, and Kendall, FL) 16.1 percent
  • Las Vegas (including Las Vegas, Henderson, and Paradise, NV) 15.5 percent
  • Chicago (including Chicago, Naperville, and Arlington Heights, IL) 12.6 percent
  • Washington – DC (including Washington, DC, Arlington, and Alexandria) 8.4 percent
  • New York City (including NYC, Jersey City, and White Plains) 5.1 percent

Positive Equity Offers Positives for Investors

In March, the Federal Reserve made the first of the three interest rate increases expected to take place during 2017. While each such rate increase is likely to have investors relying more heavily on rental property calculators, the current increases in positive equity may offer some relief as homeowners who have been waiting to move now decide to delve into the market. Overall, positive equity gains are likely to also help investors who are looking to liquidate some of their holdings at a profit or those who decide to use them as collateral to obtain other investment property loans.

 

March 30, 2017

Positive Equity by Numbers: What Investors Need to Know About This Important Market Trend  

Positive Equity by the Numbers: What Investors Need to Know About This Important Market Trend   In addition to massive foreclosure rates, the aftermath of the real estate market crash of nearly a decade ago also forced many homeowners into a negative equity situation. To make matters worse, many of these homes had been purchased at the very top of the real estate bubble. When it burst, those with sufficient income or resources to avoid foreclosure found themselves suddenly burdened with a home mortgage that far exceeded their home’s newly assigned after market crash value. For many, this meant staying in […]
January 17, 2017
housing stock market

The Age of American Real Estate Housing Stock is Getting Older & Older

The Age of American Real Estate Housing Stock is Getting Older & Older An aging housing stock encourages renovating old real estate as opposed to selling and moving into newer real estate.  There has been a continuous incline to this effect, saving time and space in today’s towns and cities.  Americans are becoming more and more comfortable with staying in their older home and remodeling it, as opposed to buying a brand new home.  In fact, the average age of homeowner housing increased to 37 years in 2015 from 31 years about ten years ago. As of 2015, on average, […]