During 2012, 1.7 million Americans climbed out of “underwater” status and have regained equity in their home. Data from research firm CoreLogic was released stating that 21.5% of households with mortgages were underwater in 2012’s fourth quarter compared with the 25.2% of households in the fourth quarter of 2011. CoreLogic economist Sam Khater opines that “Home equity is the biggest source of wealth, so if equity is increasing that has a very large effect on household spending and consumer psychology…”. He points out that the increase in equity filters all the way down from homeowner’s and realtors to furniture stores selling furniture for new homeowner’s to fill their homes with.
Unfortunately, the total number of US households with underwater mortgages is still a whopping 10.4 million… down from 12.1 million at the end of 2011.
Phoenix, one of the most dramatically impacted cities, has seen fairly astonishing growth in housing prices. The Case-Shiller index revealed Phoenixhome prices climbed 23% in 2012. When home prices were severely depressed, investors scooped up many homes for cash, thereby reducing some of the glut of houses on the market. The number of months supply of homes on the market is now down to 2 months which has also helped push home prices up as there is a smaller supply available.
This is all good news but we will have to see how the rest of the country fares as time goes on.
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