You’ve heard it before. Home prices are soaring through the roof. Houses are selling quickly. There are more buyers than there are available homes. Realtors are desperate to find homes to list. Yet, there are many home owners who want to sell, but they cannot. Almost three million home owners in fact want to sell but can’t.
Yes – they want to sell but they can’t. Why not?
Here’s the long version. We have been in a recovery in the housing market for over ten years. But many cannot sell unless they dig into their savings, sometimes they need to dig deep. Here’s why. Over 5% of all homes that have a mortgage are in a negative equity situation. That means that they still owe more than the property is worth. Now for some of these home owners, that is not necessarily a problem because they don’t want to or need to sell. But the ones that do want to sell can’t. Because of the negative equity situation, they would need to bring cash to the closing, but they can’t. And if they could, they would not have enough cash to purchase a new home.
But there are signs of improvement. A year ago over seven percent of homes were in a negative equity situation. And at the end of 2009, more than twenty five percent of homes were.
And the reason for the rise in homes with positive equity? It’s simple. When home values rise, the values have risen past the amount that is currently owed on the mortgage.
So where does New Jersey stand when it comes to negative equity? In New Jersey over seventy three percent of homes have positive equity. That number is slightly misleading however. That includes the homes that do not have a mortgage. Sorry, but the percentage of homes in New Jersey that have positive equity and a mortgage is not available to me.
Bunny and Art Reiman 732-598-7700