Archive April 2010

A recent USA Today article contained the following:

“Negative home equity will last for years
Sunken home prices have left millions of home owners underwater, owing more on their homes than they are worth. In a study for USA Today, First American CoreLogic estimates when typical underwater borrowers will see their negative equity turn positive. Difference between value of homes and unpaid mortgages.”

I will assume that the numbers for our market, reported as Washington D.C.-Arlington-Alexandria Va., are correct and are reflected in chart 1 below. ( 2009 -$75,118 2015 +$1713 2020 + $80425).
This represents a light at the end of the tunnel for those buyers who are upside down!

If you look at chart 2 below you will see a very positive picture for the local future! This chart represents those same mortgages if they were taken out in 2009 going forward which many recent purchasers have done! This is a very positive outlook for the future and we should all be excited.

In a perfect world there would be no losers only winners, but in reality history has shown that the buying decisions and many of the refinancing decisions made in the 4 years between 2003-2007 were not rational and those borrowers will continue to experience difficulty. Going forward the people who have been able to take advantage of the reduced prices should see a return to a far more rational market, and although there will be small up and down shifts there should be gradually increasing prices for the forseeable future! As always location will be the key.