An article published in InmanNews states that nearly half of US homeowners are still ‘underwater’ as of the first quarter of 2013. Considering the gains the Scottsdale and Phoenix Real Estate Market, it is hard to believe that statistic on the onset.
Information gathered from Zillow shows that 25.4 percent of homeowners with a mortgage are underwater and 18.2 percent are effectively underwater. What that qualifier “effectively” means is when homeowners owe more than 80% of the value. This is important because for many homeowners, cashing out before they have at least 20% equity makes it very difficult to have enough for a down payment on a new home, especially when you factor in REALTOR and title fees. This is one reason why inventory is still low. Not enough equity keeps current homeowners from “upgrading,” effectively keeping the available homes on the market lower than “normal.”
What can be done about it? Zillow’s chief economist Stan Humphries says “…the only cure is patience.” The good news for Phoenix homeowners is that by the first quarter of 2014, the total percent of those underwater is projected to decrease to 23.5%. Projections also show that one of the biggest contributors to that decrease will be the Phoenix Metro Area with about 50,000 more homeowners gaining enough equity to allow breathing room.
What do you think? Will Phoenix hit the mark? Subscribe to the blog and let me know.
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