Nearly two million households in the United States rose from the murky depths of negative equity in 2012, and another million are on track to do the same in 2013. Such is the rosy report recently issued by online real estate analytics and marketing site Zillow, which added that at the end of 2012 there were approximately 27.5 percent of underwater mortgage in the United States.
Aside from the good news with regard to negative equity reduction, Zillow also reported that median home values saw an overall appreciation of 5.9 percent in 2012, raising prices to an average of $ 157,400. As expected, the busiest housing market in the nation in terms of real estate purchases and rentals is also the leader in recovering from upside-down mortgages. The red-hot Phoenix housing market saw more than 135,000 homes climb out of negative equity, followed by 72,936 in Los Angeles. The South Florida real estate market is also seeing the light, although the Sunshine State is still deeply affected by a high foreclosure rate that does not seem to budge.
A Long Way to Go
More than 13.5 million American homeowners are still in a negative equity situation. There are two active government initiatives seeking to ameliorate this equity mismatch; the Home Affordable Refinance Program (HARP) and the provisions of the National Mortgage Foreclosure Settlement Agreement are trying to bring down outstanding mortgage principals to place them in line with the market.
Zillow also pointed out that even sizzling real estate markets such as Phoenix still have a long way to go to return to the halcyon days circa 2006. Home prices in Phoenix appreciated by more than 20 percent in 2012, but they are still more than 40 percent off their highs from six years ago. The number of nationwide deeply underwater properties is still troubling since about 3.8 percent of borrowers owe more than twice on their mortgages than what their homes are worth.
The forecast by Zillow on the percentage of negative equity homes in the U.S. at the end of 2013 is conservative, yet optimistic. Zillow’s projection of 25.5 percent underwater properties in late 2013 is in line with a recent report by the Mortgage Brokers Association, which explained that mortgage delinquencies fell sharply in 2012 to 7.09 percent. That is the lowest rate of mortgage delinquency since 2008, the year when the housing market suffered some of its deepest deterioration.
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