A healthier Charleston real estate market is here! The number of local mortgage holders who owe more to the bank than their home is worth is trending downward. This is great news for Charleston’s housing market. The research firm CoreLogic analyzed the Charleston real estate market, and here is their assessment.
CoreLogic focused on the percentages of negative equity from the second quarter of 2012 to the third quarter of 2012. Almost 22.3 percent of homeowners in the Charleston metro area (Charleston, North Charleston, Summerville) had negative equity in the second quarter of 2012. How do home buyers get negative equity? Home owners end up underwater on their mortgages because the home has declined in value, they have refinanced and taken out more debt, or a combination of the two. By the end of the third quarter, this number of underwater residential properties decreased to 22 percent.
When looking nationwide, close to 100,000 owners came into a positive equity situation from July to September in 2012. Mark Fleming, the chief economist for CoreLogic states that through the third quarter, the number of underwater borrowers has declined substantially. Positive equity is where the homes are more valuable than the mortgage loan amounts. Also in the third quarter, CoreLogic found almost 7 percent to have near negative equity. Near negative equity is when the home values are barely above the mortgage amounts. This means that 2.3 million owners had less than 5 percent equity at the end of the third quarter of 2012. CoreLogic says that the $31 billion dollar decline in negative equity was partially due to the improvement home buyers have seen in home prices. The lower end of the housing market is where the negative equity is concentrated. Negative Equity of homes valued at less than $200,000 is 28.7 percent, which is close to double the 14.6 percent of the homes valued at over $200,000.
Overall, the Charleston real estate market follows the countrywide market as a whole, which is trending upwards. There has been some steady healthy progress toward the reduction of negative equity, but we still have a way to go. As we dip our toes into 2013, we see more and more buyers avoiding the negative equity trap and beginning to make more educated mortgage decisions. Homebuyers making wise purchasing decisions will result in an even more stable housing market in the near future.