Do You Live in an Equity Rich State?

Foreclosures are no longer common, short sales are almost non-existent, and in most areas of the country homeowners have regained, if not exceeded, the equity in their homes that they enjoyed before the ‘bust’.

In the mainstream market in most American cities and towns, home prices are rising at what most consider a normal rate, 6% to 7% per year. Here in Arizona, in the Greater Phoenix Valley, 2017 is expected to see above average population growth which theoretically should give the Phoenix area real estate market a slight boost. As a matter of fact in a recent article, Realtor.com put Phoenix as number 1 among the Top Real Estate Markets for 2017. So what would I say about our market this year? So far, so good!

Phoenix area real estate inventory is still a bit low and home buyers are still scrambling to get into the $250,000 and under market. Sales on larger and higher priced homes are more sluggish but I am confident that a few more weeks and the end of the school year will take care of that.

Equity continues to build for the majority of homeowners with mortgages, with another $227 billion added in the third quarter of this year, according to a recent analysis by CoreLogic. Year-over-year, equity has grown 10.8 percent, or by $726 billion—a figure that equals $12,500 per home.

“Home equity rose by $12,500 for the average homeowner over the last four quarters,” says Frank Nothaft, chief economist for CoreLogic. “There was wide geographic variation, with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average.”

The states and metropolitan areas with the most homes with positive equity in the third quarter, according to the analysis:

Texas (98.4 percent)
Alaska (98.1 percent)
Colorado (97.9 percent)
Utah (97.9 percent)
Washington (97.9 percent)
San Francisco-Redwood City-South San Francisco, Calif. (99.4 percent)
Houston-The Woodlands-Sugar Land, Texas (98.5 percent)
Denver-Aurora-Lakewood, Colo. (98.4 percent)
Los Angeles-Long-Beach-Glendale, Calif. (96.9 percent)
Boston, Mass. (95.3 percent)

The states and metropolitan areas with the most homes with negative equity in the third quarter:

Nevada (14.2 percent)
Florida (12.5 percent)
Illinois (10.6 percent)
Arizona (10.6 percent)
Rhode Island (10 percent)
Miami-Miami-Beach-Kendall, Fla. (17 percent)
Las Vegas-Henderson-Paradise, Nev. (16.2 percent)
Chicago-Naperville-Arlington Heights, Illinois (12.2 percent)
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W. Va. (8.7 percent)
New York-Jersey City-White Plains, N.Y.-N.J. (5.1 percent)

The newest members of the “equity stacked” include the 384,000 homeowners who transitioned out of underwater status in the third quarter. These homeowners, according to the analysis, add to the 93.7 percent total of homes now with positive equity. The percentage of homeowners still underwater is receding, down 10.7 percent quarter-over-quarter and 24.1 percent year-over-year.

What is causing the regain in equity? A combination of factors, says Anand Nallathambi, president and CEO of CoreLogic.

“Price appreciation is the main ingredient for home equity wealth creation, and home prices rose 5.8 percent in the year ending September 2016 according to the CoreLogic Home Price Index,” says Nallathambi. “Paydown of principal is the second key component of equity-building. Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster.”

For more information, Call or Text: 602-999-0952
eMail: golfarizona@cox.net
Bill Salvatore / Arizona Elite Properties
Residential Sales, Marketing, and Property Management

Source: CoreLogic Reprinted with permission from RISMedia. ©2016. All rights reserved.

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