Are Rising Prices Tempting More Home Owners?
With rising home prices, more home owners are finding they can sell without fear that their mortgage is worth more than their house. The number of sellers coming onto the market is serving as a relief to home buyers who were becoming increasingly frustrated at the lack of inventory and increased bidding wars, the Associated Press reports.
It’s a “virtuous circle,” says Mark Fleming, chief economist of CoreLogic, a real estate data provider. “The fact that house prices have increased so dramatically … has unlocked a lot of that pent-up supply.”
From January to March, about 19.8 percent of homes nationwide with a mortgage are considered “underwater” — that’s a drop from 23.7 percent a year earlier.
The largest percentage of underwater homes in the nation are often found in the markets with the lowest supply of homes for sale, according to CoreLogic. Tampa Bay, Fla., and Miami have the highest number of underwater mortgages of metro areas at 41.1 percent and 40.7 percent, respectively.
Housing inventories remain constrained in many markets. As of May, there’s a 5.2-month supply of existing homes for sale nationwide, according to the National Association of REALTORS®. One year earlier, the supply of homes stood at 6.4 months.
Some home owners may continue to resist selling despite regaining equity, believing that home prices may rise even more if they wait, economists say. However, economists predict that as inventories increase, home price increases will moderate.
Source: “Home price gains bring ‘underwater’ sellers off sidelines, relieving frustrated buyers,” The Associated Press (June 30, 2013)
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