Growing Homeowner Equity to Have Positive Impact on the Housing Market

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Fewer homeowners are underwater in the spring of 2014 compared to a year ago and more homeowners have more than 50% equity in their properties. These are clear indicators that the housing market is heading towards stability. The growing equity is actually expected to boost the market even further and to make homes more affordable to prospect first-time buyers.

The number of homeowners with more than 50% equity in their property reached 9.9 million during the first quarter of 2014. This corresponds to 19% of all homes which are mortgaged. The majority of homeowners with over 50% equity are in San Jose, San Francisco, Los Angeles and Honolulu. At the same time, there are fewer homeowners whose debt is greater than 25% of the current value of their property. Their number dropped from 10.9 million during the first quarter of 2013 to 9.1 million in the first quarter of 2014. While a year ago 26% of homeowners were underwater, their share is now 17%.

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The growing number of homeowners whose equity exceeds half of the property value can uplift the housing market further. Now they can take advantage of the favorable mortgage conditions to move to bigger and more expensive houses. With mortgage rates falling instead of rising as predicted and lenders offering more flexible terms, homeowners with more than 50% equity can score excellent deals. The unstable inventory works in their favor as well. A property for sale is likely to stay in the market for a much shorter period of time now than it did just several months ago.

As current homeowners move to more expensive housing, their current homes will become available to first-time house buyers. As the market inventory grows, housing will be more affordable to prospect first-time buyers. Even those who are on a tighter budget will have better chances of buying a home.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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