The number of US homeowners who were “underwater” on their mortgage fell in the second quarter as banks began the foreclosure process on homes across the country. Analysts see this as a positive sign, despite the negative impact of more foreclosures, because fewer underwater mortgages (mortgages where more is owed than the value of the home) means fewer distressed property sales down the road.
21.5 percent of US homes in the second quarter fell into this negative equity category, compared to over 23 percent in the first quarter of 2010 and throughout 2009. Negative equity is a nasty problem to deal with for homeowners, making it difficult to qualify for refinancing or put the home on the market.
The stabilization in home values is one factor in the drop in underwater mortgages, though the enormous volume of new foreclosures on the market is the main cause. With home values projected to continue their decline through the end of the year, negative equity rates should remain relatively high.
During the second quarter, US home values dropped on a year-over-year basis for the fourteenth consecutive time, falling in 99 of 1444 metropolitan areas. In California, however, 20 of 26 metro areas showed gains in home values, including Los Angeles, San Diego, and San Francisco, all three of which saw gains in home value for the fifth consecutive quarter.
Many of these California markets benefited from both state and federal tax credits for homebuyers, which caused a spike in demand thus quickly driving up prices. The national numbers were booned by the $8,000 federal tax credit for homebuyers in the second quarter. Analysts are predicting a bottom in home values could be reached later this year. Sales have dropped steadily since the tax credits expired.
June saw a new record set for foreclosures, with just over .11 percent of US homes being foreclosed on during the month. It's the highest ratio reported since Zillow began tracking foreclosure data in 2000. In addition, more than a fourth of all homes sold in June were sold for less than the seller had originally paid.
Foreclosure re-sales made up just under 17 percent of all US home sales in June, down from a record of nearly 20 percent set in February. Several California markets actually saw more foreclosures account for the majority of sales, including El Centro, Merced, and Madera.
21.5 percent of US homes in the second quarter fell into this negative equity category, compared to over 23 percent in the first quarter of 2010 and throughout 2009. Negative equity is a nasty problem to deal with for homeowners, making it difficult to qualify for refinancing or put the home on the market.
The stabilization in home values is one factor in the drop in underwater mortgages, though the enormous volume of new foreclosures on the market is the main cause. With home values projected to continue their decline through the end of the year, negative equity rates should remain relatively high.
During the second quarter, US home values dropped on a year-over-year basis for the fourteenth consecutive time, falling in 99 of 1444 metropolitan areas. In California, however, 20 of 26 metro areas showed gains in home values, including Los Angeles, San Diego, and San Francisco, all three of which saw gains in home value for the fifth consecutive quarter.
Many of these California markets benefited from both state and federal tax credits for homebuyers, which caused a spike in demand thus quickly driving up prices. The national numbers were booned by the $8,000 federal tax credit for homebuyers in the second quarter. Analysts are predicting a bottom in home values could be reached later this year. Sales have dropped steadily since the tax credits expired.
June saw a new record set for foreclosures, with just over .11 percent of US homes being foreclosed on during the month. It's the highest ratio reported since Zillow began tracking foreclosure data in 2000. In addition, more than a fourth of all homes sold in June were sold for less than the seller had originally paid.
Foreclosure re-sales made up just under 17 percent of all US home sales in June, down from a record of nearly 20 percent set in February. Several California markets actually saw more foreclosures account for the majority of sales, including El Centro, Merced, and Madera.
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