Many homeowners are underwater:
More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed
Others don’t have enough equity to “trade up”:
Another10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equity” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.
Everyone wants to buy at the bottom
But few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.
Banks have been slower at foreclosing:
Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modifications and foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the market
Marquis McCrimmon, Realtor®, Certified Distressed Property Expert, Internet Marketing Specialist knows the Dc and Maryland Real estate market! We offer Buyers & Sellers a Free Market analysis of their neighborhoods. If you’re considering selling your home or looking to purchase call Marquis McCrimmon w/EXIT Bennett Realty today 202-498-7222