With home prices on the rise throughout the Valley, more than 50% of Valley homeowners are finally above water. This means that their homes are worth more than they owe on it.
According to Zillow, the share of locals that have negative equity fell to 48.4% in the second quarter of this year compared to 54.3% in the first quarter which was well below the high of 71% in the first quarter of 2012.
The Valley’s negative equity is still more than twice the national average of 23.8% and is much higher than the 5% that is considered a healthy rate. Even with the decline there are still over 160,000 households that are underwater.
The good news is that with over 50% having positive equity it will allow many homeowners to be able to sell their homes and move up to other properties. This should ease our tight inventories and help out first time buyers that have been having trouble competing with cash investors.
Rising home values also make individuals feel richer as it creates a wealth effect knowing that their home is worth more than they owe on it.
Zillow estimates that the underwater rate for the Valleys homeowners should drop below 40% by the second quarter of next year but they feel it will take about 5 years to drop below 20%.