According to a CoreLogic report, the amount of negative-equity mortgages decreased significantly in this year?s first quarter as a result of improved home values.
The report states that more than 700,000 homes came out of negative equity in the first quarter, compared to the last quarter of 2011. Specifically, that means that of the 48.06 million mortgages in the nation, 13.72 million (28.55 percent) were either described as carrying negative equity or being close to it. Negative-equity mortgages, also known as underwater mortgages, are simply home loans on which the borrower owes more than the house is worth.
Arkansas fared better than the rest of the nation in that particular report. Of the 249,423 outstanding mortgages in the first quarter, 46,851 (18.78 percent) were in the negative-equity realm or close to it. Compare that to Nevada, the state with the highest percentage of underwater loans, where 367,393 mortgages ? or 66.14 percent of the 555,458 outstanding home loans in the state ? were carrying negative equity or were close to that point.
It would be a great thing to have some numbers from the second quarter so we could see if the number of negative-equity mortgages continued to decline, but it does take a while to generate those statistics.
Regardless, it does appear that CoreLogic?s findings that improving home values were responsible for the declining number of equity mortgages was right on target. We?ve certainly seen prices improve in Arkansas, and that has undoubtedly helped out more than a few homeowners in The Natural State.
If we look at the two largest markets in the state ? central and Northwest Arkansas ? we see that the average sale price through July was $167,914, up 9.81 percent from $154,173 through the first seven months of 2011. Clearly, homeowners on average are getting more money for their homes than they were a year ago.
More significant, of course, is the fact that sales prices do tell us quite a bit about value. Real estate markets revolve around the concept of comparable sales: The fair market value of a home is largely contingent on how much money similar houses sold for in the recent past. If a homeowner is worried about negative equity, rising fair-market values are encouraging.
Bear in mind that it?s risky to point to rising home values as a trend at this point. The real estate market has been too chaotic over the past few years to start claiming that values will continue to rise. Similarly, not all homeowners will see the values of their houses increase significantly.
In other words, real estate markets aren?t out of the woods yet. There are still far too many homes out there that are worth less than what is owed on them, and there remains a good amount of concern over foreclosure rates, job markets and other worrisome economic indicators.
Still, a decline in the number of negative-equity mortgages is very good news. Hopefully, a trend is forming.
Home Sweet Home is distributed by the Mortgage Bankers Association of Arkansas. Visit the association online at mbaar.org.
More from columnist Ethan NoblesSource: http://news.homesarkansas.net/?p=4146
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