Good real estate news: Home equity is rising againNumerous articles have reported that homeowners are underwater and that strategic defaults are increasing. However, a little known statistic by the Federal Reserve shows that home equity again is on the rise.
Points to remember:
- The Federal Reserve conducts substantial research on mortgage balances and home-value changes in hundreds of local markets nationwide and reports its finding quarterly. According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity increased by nearly $1 trillion compared with the recession’s lowest point between the first and third quarters of 2009. From June 30 to Sept. 30, net equity rose by $418 billion.
- According to a report by Zillow.com, the overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4 percent. This report, combined with other housing factors and studies, may indicate that the unprecedented reduction in home equity is shifting.
- Some homeowners, especially those in areas with high foreclosure rates, are choosing to strategically default on their mortgages, even though they can afford the mortgage. Many homeowners who choose this approach do so because they do not see an economic rationale in continuing to make their mortgage payments. Homeowners considering this option should be aware of the negative effect it will have on their credit status. Foreclosures can remain on credit reports for up to seven years, likely increasing the interest rates the consumer pays for credit, and making it more difficult to receive approval on a new mortgage loan.
To read the full story, published Feb. 18, 2010 in the Wall Street Journal please click here.
Don’t bank on it! that’s just a statistical glitch, with the looming ARMs disaster everything is going to get worse, much worse!
Hi Chris,
I had a look at your referenced blogs. I’d hate to think that your a “glass half empty” kind of guy. And what you are writing about may well be true within your area. In my little corner of Kern County, things are definitely looking up. And yeah, I’m more of a “glass half full” type. I’m also pretty convinced that if everyone keeps saying the “sky is falling” then it probably will.
Oh! This is great! Thanks for putting to rest severalsome
misunderstandings I had read on this recently.