Negative Equity in the US

Negative Equity in the US.

CoreLogic, a California based research firm, reported that as of the 3^rd quarter of 2013, the number of properties with a mortgage in the US is about 42,6 million.  About 6.4 million – or 13% – still have a negative equity. 

 

CoreLogic indicates that, of those 42.6 million properties with positive equity, 10 million have less than 20% equity, leaving them in a situation where it’s still hard to refinance due to underwriting constraints.

 

"Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion," said Mark Fleming, chief economist for CoreLogic. "Negative equity will decline even further in the coming quarters as the housing market continues to improve."

 

The state of Nevada had the highest percentage of mortgage properties in negative equity at 32.2%, followed by Florida (28.8%), Arizona (22.5%), Ohio (18%) and Georgia (17.8%).

HousingWire.com article by KerriAnn Panchuk

 PS: let’s remember that many transactions are cash: According to this very nice RealtyTrac study, all-cash purchases nationwide accounted for 40 percent of all sales of residential property in July.

 

Thanks for reading, and may you have an excellent Holiday Season!

Francis Rolland
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

Automated valuation systems in real estate

Countless are the times when clients tell me that they believe the value of their home is “X” because Zillow or another automated valuation system on the internet said so. 

Automated home value estimates have been a popular tool for real estate search websites, and while these tools may satisfy clients’ needs for quick information, in many cases the information they provide is inaccurate.  Although many agents and brokers are aware of the limitations of these models, many consumers are not, and improper use of these tools can encourage mistakes.

Automated valuation models (AVM) are designed to predict a home’s price based on comparing it with similar properties in the area. They do this using county property record data from thousands of offices around the country, comparing several attributes such as square footage, the number of bedrooms and bathrooms, and other property features. This data cannot take into consideration the specifics of the neighborhood or the details of the properties (lot size, improvements, quality of the maintenance…).  It is my experience that while they can be a good first indication, and sometimes accurate, they miss the mark in roughly 30% to 40% of cases.  Where all homes are similar, like in a condominium complex or a given tract of identical homes, they may be quite accurate.  In places where each home is unique, in nature or in location, they can be quite off (think: Los Altos Hills, or Palo Alto to cite a few). 

As always with statistical data, a percentage of the evaluations will be accurate – but be careful it is not by mistake.  Also, figures do not know the market conditions, which can only be understood by a professional dealing with local sales 24/7.  I do not mean to be critical, but I just want to remind clients that these valuations should just be a first indication, not the final opinion of value.  Another way to look at it is, as we like to say in the business, "home valuation is not an exact science".

Read more details and the fullRE Insider interview.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Mars, Venus, and Real Estate...

As a full time agent, spending most of my time "in the trenches" I found this Real Estate News Release by Prudential quite refreshing and greatly informative, as it deals with people, attitudes, personal reactions and ... genders.  I had to look twice and - although one has to be careful with generalizations -  found some interesting trends that are not always apparent when you are buried in the details and in the heat of the action.  Also, I found their infographic illustration of their findings quite interesting.

Here is the Prudential Real Estate News Release I am referring to:

  View of Homeownership Differ by Gender
A new survey by Prudential Real Estate indicates that men and women don’t see eye to eye when it comes to homeownership and the responsibilities related to homebuying and selling.

Men claim to be more responsible for financial aspects

while women assume the lead for neighborhood research and planning portions of the process. While 39 percent of men in partnerships claim researching banks and securing a mortgage are completely their responsibility, 42 percent of women in partnerships indicated it is their sole

responsibility to manage appointments, and 34 percent take the lead in researching neighborhoods.

Women also seem to enjoy the process of purchasing a home more so than men. A full 87 percent of women said they enjoy looking at homes compared with 77 percent of men. Moreover, feelings associated with homeownership are more pronounced in women than in men. When asked about the reasons why homeownership is “very important,” more women associated it with a sense of pride or accomplishment (16 percent higher than men) and independence (11 percent higher). For men, “control over living space” and “more space for my family” were most important.  -- Complete News Release.

 

One last thought: different personalities will attract different people, and therefore each of us will have a different experience and perception of people's reactions.

What is your own experience?

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.