More Underwater Homes Floating To The Surface

     With the housing recovery firmly on track and home prices rising at a consistent pace for over a year now, underwater home owners can now see the light at the end of the tunnel. For those of you who do not understand the term "underwater", it refers to the concept that the homeowners owe more towards their mortgage then what the current value of the home is worth. A recent report from RealtyTrac has shown that 10.7 million households, as of September 2013, owe 25% more on their mortgages then the value of the home itself (The 10.7 million accounts for 23% of all homes nationwide that have mortgages). Although this seems to be a staggering number, it is actually a great improvement seeing that in May 2013, just a few months ago, the number was 11.3 million and September 2012 the number was 12.5 million.

     

     It has been a long six years since the housing collapse that caused countless homeowners to sink underwater on their mortgages. As I have mentioned in many of my previous posts, the issue of the housing inventory shortage has plagued buyers for quite some time, and having millions of home owners underwater is a big part of the problem. A majority of the home owners currently underwater would like to sell their home and move on, however that cannot be done until they resurface on their mortgages.

     Good News! The same report from RealtyTrac shows that the recent spike in home prices has moved a good amount of these underwater households much closer to resurfacing on their mortgages. An approximate 8.3 million households, that have been underwater, are expected to gain enough equity back in their homes to be able to sell within the next 15 months; without having to succumb to a short sale. This is great news for the housing market because this means that we are getting much closer to a more abundant housing inventory. 

“Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months,” says Daren Blomquist, the vice president at RealtyTrac.