What’s Happening to the Most Important Homes in Real Estate? | South Salem Real Estate

What’s really happening with homes in the bottom price tiers?

These are the most important homes in the entire real estate economy.  They are where the housing ladder begins: they are then entry point for new buyers, the starter homes that MUST be available and affordable for Millennials if the housing economy is to ever function again as it was meant to.  Until families ready to move up lists their starter homes, nothing is available to buy.

Reams have been written about tight credit stopping first time buyers but almost nothing about an equally serious problem. Homes on the lowest tier haven’t appreciated sufficiently for owners to sell—or even to make it possible for them to sell.

Despite the progress that has made since the housing crash, some 5.1 million homes, or 10.3 percent of all residential properties with a mortgage, were still in negative equity as of Q3 2014, according to CoreLogic.  Another 9.4 million had less than 20-percent equity (referred to as “under-equitied”), making it virtually impossible for them to sell or refinance.  That totals some 14.3 million homes or about 28 percent of homes with a mortgage are frozen in place.

A disproportionate number of lower cost homes are among this total, according to a new analysis from Black Knight Financial Services released this week. Black Knight’s latest Mortgage Monitor Report, based on data through the end of November 2014, found that home price recovery varies significantly for properties within different tiers of home values.  .A decade after the housing crash, some 85 percent of homes valued at less than $200,000 of no equity while 94 percent of homes valued at greater than $200,000 have equity.  Home price recovery for the lowest 20 percent of property values has lagged behind those it the top price tiers.

“We looked at HPI appreciation from pre-crisis peaks to today in the 10 states currently trailing the furthest behind their pre-crisis housing maximums,” said Barnes. “The data showed a clear difference in the levels of recovery among home price tiers. The Black Knight HPI separates home values for every geographical division into five equal tiers; those in the lowest 20 percent of home values have been lagging behind their higher-valued counterparts in recovery to pre-crisis peaks, sometimes considerably.

 

read more…

 

http://www.realestateeconomywatch.com/2015/02/whats-happening-to-the-most-important-homes-in-real-estate/

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.