One of the greatest sources we have to judge the health of the housing market comes from our knowledge of the current situation combined with our ability to crunch every possible statistic we can get our hands on concerning houses. This is why the Existing Home Sale Report is one of the most valuable things a real estate professional can get his/her hands on. Knowing what is happening in the market is what makes us so valuable to those looking to purchase or sell a home. Knowing what’s going to happen in the market is what sets us apart from other professionals.
The Existing Home Sales Report for January has some very interesting things to teach us. The first thing we find in the report is the number of homes underwater (where the amount you owe on your mortgage is worth more than the value of your home). There are currently 5.1 million homes currently underwater with an additional 1.3 million borrowers having less than 5% equity (the difference between the amount you owe on your loan and how much your house is worth). When we sit down and evaluate the circumstances we find that 10.3% of homes with a mortgage are currently in negative equity.
However, the flip-side to all of this down news is that there is much more to be happy about than we mentioned. There are currently 85% of homes worth less than $200k that have positive equity with 94% of homes worth more than $200k with positive equity. According to CoreLogic the state with the highest equity is Texas at 97.4% followed by Alaska (97.1%), Montana (97.1%), Hawaii (96.4%), and North Dakota (96.1%) with many more states following suit. It would appear that while some situations are dire there are far more that are experiencing growth and positive equity for the first time since the market collapse.
While equity is good news for homeowners, home buyers are more interested to know how the sales are going across the country. Well, according to the report existing-home sales are up 2.1% from sales last year, which marked the 2nd month in a row with year-over-year gains. More good news from home sales show that more typical buyers purchased a home in November, as evidenced by the decline in the percentage of investor purchases over the last year from 19% to 15% with the percentage of first-time home buyers climbing to 31% in November, marking the highest share since October 2012 (also 31%). Of these homes, 32% were on the market for less than a month in November.
But the good news is not over just quite. The median home price was $205,300, up 5% from last year. This marked the 33rd consecutive month with year-over-year price gains. With this we found that the number of distressed homes sold only accounted for 9% of all sales in November, down 14% from last year, which is incredible. But, more so than all of that, inventory is up 2% over last year representing a 5.1 month supply. Essentially, while there are those still struggling to gain a foothold in the recovering market, there is more good news this time around to set your mind at ease.