Market gives troubled homeowners a lift
How many times have you heard potential buyers say they’re going to wait for the housing bubble to burst? That misinformation wisdom is based on some pundits’ – but not market experts’ – opinion that homeowners in mortgage forbearance would end up in foreclosure forcing prices down.
Second-quarter equity reports from ATTOM Data Solutions offer some hard local data that makes most of that bubble babble go flat. It doesn’t mean foreclosures will go away, but it doesn’t support a surge.
The percentage of local property owners with seriously underwater mortgages dropped to record lows during the second quarter of this year. How did that happen?
Even though forbearance properties were stacking up unpaid mortgage payments, their properties’ value was appreciating. So far this year, the median sales price is up 16.6%. For the 12 months ending in December, it was up 11%. So, just like record-low mortgage rates gave buyers more purchasing power, price appreciation gave troubled owners more selling power – if they choose to sell.
At the end of the second quarter, there were 2,988 seriously underwater local mortgaged properties. This time last year, there were 5,232. A seriously underwater property is defined as one with a loan-to-value position of 125%. In other words, the owner owned more than the property’s estimated value.
At the same time, price appreciation was helping lift some financial pressure off those 2,244 property owners; the percentage of equity-rich owners increased to almost 30%. That’s 18,090 properties. Those owners owe half or less of their properties value. That puts them in a strong selling and buying position.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us