Los Angeles Luxury Homes
According to a recent article in the LA Times there’s a positive trend sweeping across the country: Homeowners are finally recovering their equity.
Equity is something that has been in short supply since 2007. Many homeowners saw the equity in their homes evaporate almost overnight as home values plummeted. The following years offered little to no relief as the US economy failed to recover as quickly as hoped. This meant that many Americans were stuck in a negative equity position – owing more to a lender than their homes were worth.
Fortunately, recent studies have shown that home values are once again on the rise and Americans are pulling themselves out of the red and into the black.
From the LA Times:
The first was the Federal Reserve’s quarterly “flow of funds” report. Among many other segments of the economy it toted up, the Fed found that homeowner equity has rebounded to its highest level in eight years — though it’s still not quite back to the $12 trillion it was during the hyperinflationary high point of the housing boom in 2005.
The second study, from real estate analytics firm CoreLogic, focused on the flip side — the impressive shrinkage of negative equity. According to researchers, nearly 43 million owners with mortgage debt have positive equity. Roughly 6.5 million owners are still in negative equity positions, however, down from more than 10 million a year ago and 12 million in 2009.
The Los Angeles real estate market is neither the best nor the worst in terms of homeowners with negative equity in their homes. With 12.6% of California homes underwater, California is below the national average of 13.3% and significantly below the state of Ohio with their 19% rate but nowhere near Texas with their rate of 3.9%.
This trend has positive implications beyond just the real estate market. Homeowners with positive equity often find that their lives are much easier. They can borrow money against home, they have the option to refinance and their monthly bills are often less – due to better interest rates and no PMI requirement. This increased spending power can stimulate economic growth as people feel more secure and are more likely to invest.
To read the complete article, please visit the LA Times.
Susan Andrews | Estates Director
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Image courtesy of Corelogic