Though home prices are on the rise, at the end of June, 7.4 million homeowners remained gravely underwater on their mortgages. This means that the outstanding balance they owe on their mortgage exceeds the value of their house. Homeowners in this position are also referred to as being upside-down on their mortgage are as having negative equity.
The average loan amount taken out by these homeowners was at least 25% higher than the market value of their property. What’s more, 13% of all houses are worth less than what is owed on mortgage, slightly up from the first quarter of 2015. Many are wondering how this can be, considering home prices are still rising.
The Median Price
As regards June home sales, the median price was at its highest ever. This means that half of homes sold for a higher price, and the other half sold for a lower price. As follows, more expensive homes are selling better, skewing the median higher.
Taking repeat sales of comparably priced homes into account, it would appear that home prices have actually been shrinking, though they remain higher than last year. As such, almost half our country’s top market homes are actually falling in value.
The Metro Index
The major metropolitan region house price index is creeping up far more gradually than they were last year, though market reports seemingly indicate that values are rising in general. Then again, homeowners simply own one home, not the entire market.
Bigger, pricier homes are lingering on the market and taking more price cuts than smaller homes, with 2 bedrooms at most. This may be the case, as a result of a short supply on the lower end, as opposed to the high end of the market. Bearing in mind, these numbers factor in estimates of all home values, not simply those for sale.
Value vs. Price
Value and price trends tend to be similar. However, with respect to values, the set of data is far broader than with home prices, which are skewed towards homeowners with greater equity.
Nonetheless, in this market, homeowners with greater equity are more inclined to sell in order to capitalise on their equality. While, homeowners grappling to regain their equity aren’t likely to sell their homes.
Although the number of underwater borrowers has risen for two consecutive