Number of underwater homeowners on the way down
Posted on Thursday, January 9, 2014 at 10:26:47 AM
Going underwater - or owing more on residential financing than the home is currently worth - is one of the greatest fears of any homeowner. Thankfully, the number of people in this situation is dropping across the country.
According to RealtyTrac, only 9.3 million U.S. residential homes were deeply underwater in December. To be considered in that bracket, the loan amount must be at least 25 percent above the property's value. In September, there were 10.7 million borrowers deeply underwater, and 10.9 million in January 2013.
Rising home prices has helped more borrowers avoid foreclosure, Daren Blomquist, vice president at RealtyTrac, explained. Better yet, he added that equity-rich homeowners will start to sell, boosting inventory and helping the economy in 2014.
These positive changes to residential financing will help homeowners spend more money in the new year, according to Bloomberg. Every gain in equity leads to more stable personal wealth.
"For most people, their home is still far and away their most important asset, and when it appreciates in value it gives them a much brighter perspective on their finances," Mark Zandi, chief economist at Moody's Analytics Inc., told the media outlet. "The lackluster spending we've seen in the recovery so far is going to be pushed a notch higher because of real estate."