One Million Homeowners Are Back in the Black
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Negative equity—owing more on your mortgage than your house is worth—has been a devastating multi-headed hydra over the past six years. Negative equity makes homeowners vulnerable to foreclosure should they hit hard times. It has sapped the primary source of retirement wealth for working families, and it…
Negative equity—owing more on your mortgage than your house is worth—has been a devastating multi-headed hydra over the past six years. Negative equity makes homeowners vulnerable to foreclosure should they hit hard times. It has sapped the primary source of retirement wealth for working families, and it has frozen owners in place, making it difficult for them to move away for better jobs or to move on to homes that better fit their pocketbooks or family needs.
For the first time in years, negative equity has declined sharply as the result of improving home values in many real estate markets, moving some one million homeowners into the black. According to Federal Reserve data, home equity rose by $457.1 billion in the first quarter of 2012, a 7.4 percent increase from the previous quarter, and its highest level since the second quarter of 2010.
Hundreds of thousands more owners will rise above the surface if prices continue to improve during the balance of the year. According to CoreLogic, at the end of the first quarter some 1.9 million of the 11.4 million borrowers underwater at that time were within 5 percent of reaching positive equity. Those 11.4 million borrowers represented 23.7 percent of all residential properties with a mortgage. This is down from 12.1 million properties, or 25.2 percent, in the fourth quarter of 2011.
A steep decline in negative equity might have some unintended consequences. A major reason prices are starting to rise is an inventory drought. Some 20 percent fewer homes than last year are on the market this year. A major reason for the drought is negative inventory; millions of owners simply can’t afford to sell. But as rising values push homeowners out of negative equity, many who have delayed their plans to move up or move on may act.
Early next spring, at the beginning of the 2013 home-buying season, would be the logical time to see how much inventories rise. Healthier inventories might slow the price rise, but they also might stimulate sales and keep prices moving north. The inventory shortage has kept home sales lower than they would have been otherwise, as many buyers couldn’t find what they were looking for. Rising demand from first-time homebuyers eager to act while homes are affordable and move-up buyers who have been long absent from the marketplace could strengthen and broaden the housing recovery.
Few will miss the record levels of negative equity that have crippled net worth and curtailed retirement plans. Homes made up 47.6 percent of the total non-financial assets held by Americans in 2009 and household net worth declined 40 percent from 2007 to 2010 due to a decline in housing prices.
Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.
Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.