Thanks to the fast moving Real Estate market, including a six percent increase in home values in July, negative equity is falling fast, and it’s continued to fall for the fifth quarter in a row.

Recent statistics from Zillow show that less than 25% of homeowners in the United States are “underwater” or have negative equity and this is the first time that negative equity in the United States has been this low, at least since 2011 when Zillow began tracking negative equity.

Encouraging News, But….

When we finished the end of the second quarter there were just over 12 million homeowners in the United States that were underwater or had negative equity with their mortgages and this statistic was down from 13 million homeowners who had negative equity at the end of the first quarter.

Although the percentage of homeowners across the United States who have negative equity is declining Zillow reported that there still are close to 60 percent of homeowners in the U.S. that have underwater mortgages and many of them are underwater by up to 20 percent or more.

What does this mean for the Real Estate market in the long run? Homeowners who are deep underwater in their mortgages, by 20 percent or more face the possibility of waiting at least another four years until their mortgages reach positive equity once again.

What to Expect

Dr. Stan Humphries, the Chief Economist for Zillow, recently said this about homeowners in the United States who continue to deal with negative equity: “The frustratingly slow pace of negative equity declines in the face of such robust home value appreciation is a direct result of the fact that many people in the hardest-hit markets are underwater by an enormous amount. Because of this, negative equity will be a factor in these markets for years to come, constraining the supply of homes for sale and keeping people out of the market who might otherwise get involved.”

Yes negative equity does remain a concern in the United States but with the fast growing Real Estate market many economists, including Zillow’s Dr. Humphries are predicting that negative equity will continue to drop to 20 percent or lower as we approach 2014 and beyond, freeing underwater homeowners, and giving them the opportunity to get back on track financially or sell their homes.

To learn more about the latest Real Estate news, or to view Bend homes for sale, contact me today by calling (541) 383-1426.