There’s great news for American homeowners. This week USA Today reports that rising home prices have helped up to 4.2 million U.S. homeowners. Now, as of the third quarter, the number of homeowners who owed more than their house is worth has decreased almost 40%, down from 10.6 million last year to 6.4 million this year, according to CoreLogic. While that’s not great news for the almost 13% of homeowners with homeowner equity in the negative territory, this is great news for millions more, especially those who may be considering selling their homes this year.
What can we expect in the future for homeowner equity?
Housing experts suggest this move in the housing market is likely to continue. In fact, according to Mark Fleming, CoreLogic chief economist, we can expect the negative homeowner equity equity to continue to decline over the next coming months. But Economists have also predicted the homeowner equity decline could lesson as home price gains are expected to slow from the 12.5% increase in October, over the same period last year.
Where are home prices still in the tank?
It’s not great news everywhere. Nevada, Florida, Arizona and Ohio continue to have very negative homeowner equity rations. In fact, Nevada has negative equity at 32.2%, followed by Florida, 28.8%, Arizona, 22.5%, and Ohio, 18%. Orlando, according to CoreLogic’s data, has the “highest percentage of mortgaged properties in negative equity at 32.3%, followed by Tampa-St. Petersburg at 30.1% and the Phoenix region at 23.2%.
How do I sell my home with negative homeowner equity?
While home prices have improved in many parts of the country, however, many home owners have not seen the improvements. So what do you do if the balance owed on your home is more than the value of the house? If you don’t plan to move it doesn’t really matter. You simply live in the house and hope the market changes. But if you do want to move or you are facing a foreclosure, you could have some real issues.
You do, however, have a few options. One of the most popular option is a short sell. Under this arrangement the mortgage lender takes less than the full payoff value in return for marking the mortgage paid in full. Why would the lender do this- because they assume it’s better than you walking away from the property, having to foreclose on the house or filing bankruptcy.
Next, in some areas of the country you may be able to make some small home improvements and raise the sale price of the home. For example, if you can buy and install new flooring at a reasonable price you might get more for your home.
Finally, if you are ready to move and you have negative equity you may simply have to pay the difference at closing. This can be done after considering your options above. This, however, may not be a good solution for everyone, but if you have to move, it may be your only choice.
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