2 Million Homeowners Freed from Negative Equity in 2012

At the end of 2011, the percentage of homeowners with negative equity, or an underwater mortgage, sat at 31.1%.  Q4 of 2012 saw that percentage fall to 27.5%. This means that nearly two million homeowners were freed from negative equity in 2012.

To spell out just how many homeowners those percentages point to, in 2011, 15.7 million people owed more on their mortgages than their homes were worth. That number now rests at 13.8 million homeowners as of Q4 2012. On top of those statistics, it is evaluated that those 13.8 million homeowners were collectively underwater by more than $1 trillion.

This information comes from Zillow's Negative Equity Report. They further predict that by Q4 of 2013, the negative equity rate will fall to at least 25.5%. That figure would mean that more than 999,000 additional homeowners nationwide would be freed.  This is all determined by Zillow's method of applying anticipated appreciation or depreciation rates to a home, assuming all other factors remain constant.

"As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets," said Zillow Chief Economist Dr. Stan Humphries. "But negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas. As a result, negative equity will remain a major factor in the market for the foreseeable future."

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Mortgage Delinquency Rate Declines 14% in 2012

The national mortgage delinquency rate is defined as the rate of borrowers who are 60 or more days past due on their monthly mortgage payments. The amount of people who fall in this category has declined for the fourth consecutive quarter. Q4 of 2012 saw a mortgage delinquency rate of 5.19% which was down from 5.41% in Q3, and 6.01% in Q4 of 2011. Statistics aside, delinquency is decreasing. This means that as the economy continues to recover with time, more and more people are able to continue paying their monthly payments.

This was the largest yearly decline that the delinquency rate has seen since the recession officially ended, but we still have a long way to go to radically improve life for homeowners. In 2007, delinquencies rose 54%. They rose 53% in 2008 and 50% in 2009. Since then, the decline has been much more gradual than the rise was. It dropped 7% in 2010, 6% in 2011 and now 14% in 2012. We are on the right track but the overall levels are still high compared to where they sat before the recession hit.

If more borrowers can qualify for refinancing, they can obtain lower interest rates that will ultimately lead to lower monthly mortgage payments. This lends to fewer foreclosures and fewer delinquencies. If you are having difficulty paying your mortgage, Quest Loans can help you apply for refinancing. Call us at 888-883-5252 for more information, or visit QuestLoans.com!

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23% of Homes Sold in Q2 were Foreclosures

According to RealtyTrac's latest Foreclosure Sales Report for the second quarter of 2012, nearly a fourth of the homes sold in that period of time were foreclosures. This means that there is now a limited supply of foreclosed homes available for sale in some markets. However, the past three months have seen an increase in foreclosure starts which may help to ease the shortage in the coming months. Also, the average price for these foreclosure sales increased in Q2, bu they were sold at a price that is 32% lower than the average price of a non-foreclosed home. Some of these foreclosure starts are translating to short sales. The number of properties that are under short sale status are increasing because lenders are opting for that instead of entering the complicated foreclosure process. These are also known as pre-foreclosure homes. On average, these homes sold for an average price of $185,062 in Q2, which is up 5% from the prevous quarter's record low.

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Outlook for the Housing Market in 2012

As of December 2011, unemployment rates fell to their lowest level in three years with the addition of 200,000 jobs. This means good news overall for the real estate market since the country's economy is beginning to improve. This recovery is essential for the housing market and it is expected to continue throughout 2012. As we reported earlier, the Fed has announced that interest rates will not be raised until 2014 in the hopes of continuing in this economy recovery. The interest rates are currently at historic lows and are expected to stay that way to ensure a slow but steady rise by the end of the year. Therefore, taking out a mortgage is a very affordable thing at this time.

Predictions for the 2012 housing market include these continued low interest rates as well as the stabilization of home prices. This should lead to an increase in home sales: roughly 12% of existing homes and 74% of new homes; and there will also be a rise in inventory mostly due to increased foreclosures throughout the country. Distressed properties will make up about half of all home sales. There will also be an improved short-sale process so we can further avoid foreclosures. Homeownership rates are expected to continue to fall. Foreign and domestic investors will be likely to buy 25% of homes. And there will be an increased reliance on real estate agents in 2012. We will continue to report on these matters to see if these predictions pan out over the next year.

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