According to Lennox Scott, home prices in the Northwestern U.S. reached bottom around November 2011. “At that time, a surge of local homebuyers regained buyer confidence to move forward with home purchases,” explains Scott, chairman and CEO of Washington state-based John L. Scott Real Estate. “Prices have seen double digit gains for homeowners in 2012/2013, thus bringing underwater homeowners into positive equity. However, there is still a ways to go before the majority of underwater owners see some relief.”
According to the CoreLogic report, the decrease in negative equity is driven in large part by an improvement in home prices. Tuesday’s S&P/Case-Shiller data reports home-price gains in 19 of 20 cities, with the 20-city composite index rising 2.5 percent in April, the largest monthly growth on record (data dates back to 2000). After seasonal adjustments, prices rose 1.7 percent in April. Compared with the same period in the prior year, prices in April rose 12.1 percent, the fastest annual pace since 2006.
While low interest rates have been fueling homebuyer demand and thereby, home prices, rates have been trending slightly higher in recent weeks. Some believe that higher rates could curb demand among some buyers, but most industry experts agree that increasing rates will serve to push many more buyers into action. As homebuyers continue to flood the market, fueling home values and homeowner equity, top brokers set their sights on the return of the move-up buyer.
“Recently, with the sudden rise in interest rates, up one half point, we have seen a mini power surge of sales activity,” reports Scott. “This is usually the case with sudden rate increases, however this time, we also saw an increased number of sellers bringing their homes on the market, so as to also be in a position to take advantage of rates before they continue to rise. The current market conditions are creating a high velocity of sales activity, keeping the inventory of homes for sale low. With the return of positive equity, previously underwater homeowners can now sell their home if the timing is right for them.”
