Americans Recover Home Equity at Record Pace

November 21, 2013
mortgage lending news

Zillow reports that the number of Americans who owe more on their mortgages than their homes are worth fell at the fastest rate on record in the third quarter as prices continued to rise -- further proof that supply shortages may improve as more owners find themselves in a position to sell. The share of homes with mortgages that had negative equity fell from 23.8 percent in the second quarter to 21 percent as of Sept. 30, according to the Seattle-based firm.

Furthermore, the share of owners with at least 20 percent equity rose from 58.1 percent to 60.8 percent over that same time span, making it easier for them to put their residences on the market and buy a new home. Neal Soss, chief economist at Credit Suisse Group AG, forecasts, "Home sales will pick up very nicely when people gain the equity they need to sell their house and have a down payment for the next one. There's a magnifying effect on sales -- people are able to list their home and sell it, and odds are they're going to go on and buy another one." A dearth of inventory has forced many home buyers to compete. This, in turn, has driven up prices in many areas and left some shoppers out of the market.

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