Minneapolis - CoreLogic®, a leading provider of real estate data, released a new residential properties report on September 12th, showing that 10.8 million, or 22.3 percent, of all mortgages were in negative equity at the end of the second quarter of 2012. That represents a total of 1.3 million US households that have risen from negative home equity to positive home equity so far this year.
Destiny Homes sees positive expectation that home values will continue to rise given the good news that an additional 1.8 million homeowners are near positive equity by 5% or less. "I am encouraged by Anand Nallathambi's, president and CEO of CoreLogic outlook that these properties could move into 'above water' if home prices continue to improve as anticipated," says Butch Sprenger, owner of Destiny Homes.
The breakdown of information, and good news for homeowners, in CoreLogic's report is:
- 10.8 million (22.3 percent) residential mortgages had negative equity, down from 11.4 million or 23.7 percent, at the end of Q1, 2012.
- An additional 2.3 million borrowers possessed less than 5 percent equity in their home at the end of the second quarter.
- Approximately 600,000 borrowers reached a state of positive equity in Q2 of 2012.
- More than 700,000 home borrowers moved into positive equity in Q1 of 2012.
- Over 1.3 million households regaining a positive equity position since the beginning of the year.
- The share of borrowers still underwater but current on payments was 84.9 percent at Q2's end in 2012, up from 84.8 percent at the end of Q1.
“The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year,” said Mark Fleming, chief economist for CoreLogic. “Surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity.”
Coupling CoreLogic's report with the National Association of Home Builders/First American Improving Markets Index(IMI) August report on improving housing markets, many US homeowners are more optimistic.
Some homeowners have sat on the fence, wanting to remodel, while waiting to see home values increase. With news like this, time to begin the remodeling project makes sense in terms of investment dollars.. "Two of the best investment home renovation projects homeowners can make are kitchen and bath upgrades. If you think about it, that makes sense because these rooms have the highest levels of daily activity. If selling in 3- 4 years, top quality appliances, spacious bathrooms, and quality construction will go a long way to help attract buyers. In many cases homeowners can expect to recoup about 75-90% of the cost of remodeling one of these rooms", says Sprenger.
Additionally, after a press conference yesterday, Federal Reserve Chairman Ben Bernanke said, "While low interest rates impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates promote". If Bernanke is right, "not only is now a fiscally responsible time for homeowners to build, it is also good timing for home renovations", Sprenger commented.
CoreLogic's data shows a wide variance by state in home equity rates. It listed Nevada with the highest percentage of mortgaged properties in negative equity at 59 percent, followed by Florida (43 percent), Arizona (40 percent), Georgia (36 percent) and Michigan (33 percent). These top five states combined account for 34.1 percent of the total amount of negative equity in the U.S. Minnesota is above average with a 17.1% negative equity share. As more homeowners actually find that their home's equity has increased, it adds favorable opinion that the U.S. housing outlook is indeed improving.
Minneapolis and St Paul homeowners encouraged by increasing home values are moving forward with their home remodeling and renovation projects. Contact Destiny Homes at 952-934-6706 to engage a highly awarded home remodeler with over 35 years of distinctive builds in the Twin Cities area.
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