Do Homeowners Realize Their Equity Position Has Changed?

Yesterday, we reported that according to CoreLogic’s latest Equity Report, nearly 268,000 homeowners regained equity and are no longer underwater on their mortgage in the first quarter. Homes with negative equity have decreased by 21.5% year-over-year. A study by Fannie Mae suggests that many homeowners are not aware of how their equity position has changed as their home has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 8% of homes are in that position. The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%), when in actuality, 74% do! 

This means that 37% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing). Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate: 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

CoreLogic’s report also revealed that if homes were to appreciate by an additional 5%, over 800,000 US households would regain positive equity.

Bottom Line

If you are one of the many homeowners who is unsure of your current equity situation and would like to know your options, contact a local real estate professional who can help.

Source:Keeping Current Matters/The KCM Crew 062216

Here Comes the Housing Inventory!!

 Almost every real estate conversation revolves around the continuous rise in house values over the last four years. Some have even mentioned a concern about another possible bubble forming. However, the recent increase in prices can be attributed to a very simple principle: supply and demand.

DEMAND

Demand for single-family housing has continued to increase as the economy slowly moves forward. Recent surveys have shown that over 80% of each generation still believes that homeownership is a part of the American Dream. And a recent Gallupsurvey showed that Americans believe that real estate is the best long-term investment.

SUPPLY

Over the last several years, many homeowners were unable to put their homes on the market for an assortment of reasons (family finances, no or limited equity in the home). There has been a pent-up supply of sellers who have wanted to move but couldn’t. Below is a graph depicting the number of years families have historically stayed in a home. We can see there is pent-up seller demand.

As the economy improves and more families reach the point of significant equity (20%), we will see these homes come to market. As supply then matches demand, the acceleration of home price increases will begin to slow.

Bottom Line

If you are one of the families that have been chained to your current home over the last 5-7 years, now may be the time to break free and find the home of your dreams.

Source: Keeping Current Matters,The KCM Crew 061516

Single Women Make Up 2nd Largest Home Buying Group

 According to the National Association of Realtors’ (NAR) 2015 Profile of Home Buyers and Sellers, single women made up 18% of all first-time home buyers last year, second only to married couples who made up 54% of total buyers. Whether they are young, single and no longer want to rent, or newly divorced, the amount of single women becoming homeowners greatly outnumbers single males (11%). A survey of recent home buyers revealed some interesting trends about this rapidly growing group:

• Average Age: 32 years old
• Average Income: $49,400
• Single women are more likely to become preapproved for a mortgage in order to know their budget at the beginning of the home buying process and to be able to make a move if they find their dream home.
• Many female homebuyers think long-term when considering buying a home, often considering what amenities they may need in the near future.

“So what do women like best about homeownership? They believe that they are investing in their future by building equity and financial security. They are also very happy to no longer be paying their landlord’s mortgage payment. Being independent and having control over their environment is a key factor.”

It appears that it is not marriage before mortgage any longer, for either gender. As we reported yesterday, unmarried couples make up 13% of buyers, while single males account for 11%.

Bottom Line

If owning a home of your own has always been your dream, meet with a local real estate professional who can help determine if your dream can become a reality sooner than you think.

Source: Keeping Current Matters | The KCM Crew | 060816