So, have you ever wondered what's happening to homeowners that are "underwater"? Hello, this is Gary Edelbrock, and I've been talking with Lee Amble, who explains what "underwater" means and where we are now.
Alert: Underwater Homes Or Not
Written By: Lee Amble, Realtor, Consultant
A Short Look At A Long Problem
I am sure it seems like forever for some people who have been underwater on their homes because it has been a six to seven year struggle for many. That not only seems like a very long time, but it is a long time.
Just What Is Underwater?
It simply means you owe more on your home than it's worth. How did we get there? First, many did not use any common sense; they thought their $200,000 home would be worth a million. You get the idea although it is somewhat stretched.
Many homeowners as the prices went up beyond their first mortgage did get a second, or third mortgage and/or a home equity loan. Many of these loans were used to buy things they didn't need or use. I refer to it as a lack of common sense. Many just lost their way, which was their fault, but they would like to blame it on someone else. We all know the fault lies with them.
Where Are We Now?
The good news locally and nationally is that with the increase in home prices, many underwater home owners are now above water and able to breathe a little easier now. This also will help further stabilize the home market and increase their home equity. This is good for all!
Rising home values have lifted more borrowers out of the hole of owing more than your home is worth. It is an encouraging sign for the economy which is still tied to the heart of the housing market.
In 2012, underwater home owners declined by 1.7 million from a year earlier meaning 1.7 million home owners have regained their home equity. Homeowners should feel more optimistic about their finances and are more likely to spend more on goods and services. This, of course, will boost the economy. Many are now also refinancing at a much lower interest rate, which frees up cash to be used for other purchases. Home equity is the biggest source of wealth. As equity increases so does household spend and consumer psychology; a very good thing!
While home prices are rising in most markets, few have seen as big of an increase as Phoenix and most of California. The Phoenix area alone has seen a price jump of 23%, which also feeds into our local Prescott area market as most of our buyers do come from Phoenix and southern California.
Because of the above, we will see a continuance of price increases and a very short inventory for quite some time. As a buyer, you may look like a genius to find a home, if you can, when you look back at what you paid in 2013 and at the current interest rate of 3 to 4 percent. It will be unreal in my opinion.
These are my thoughts. Thank you for reading! If you have any further questions or ideas for articles you would like to read in the future, please call me! The call is free and so are my ideas!
Remember, Experience Isn't Expensive, It's Priceless!!
Selling A Home Is Easy, Doing It Right Is The Key!
Lee Amble, Realtor/Consultant/Columnist
NATIONAL REALTY OF PRESCOTT
Lee's cell: 928 533-4455