There’s good news for Phoenix home owners: fewer are underwater on their mortgages. According to a recent real estate report, the rate of underwater home owners in the metro Phoenix area dropped 31% last year versus 2011. That equates to more than 135,000 Phoenix home owners who saw their home values rise past the point of negative equity. Experts say this is by the far the biggest improvement in any major metropolitan area.
While this is good news, experts caution that the negative equity issue for Phoenix home owners is far from over. There were still about 40% of Phoenix home owners who owed more than their home was worth at the end of 2012. Compare that to the national negative equity average of 27.5%, and you can see why Phoenix still has some work to do. Still, Phoenix’s drop from the No. 2 spot in the country to No. 8 has many people thinking that the worst of the housing crisis is behind us.
Phoenix home prices are on the rise, which is one reason for the drop, but experts say not to expect the same dramatic increases in home values this year. Zillow Chief Economist Stan Humphries adds, “As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, home owners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets.”
Inventory issues continue to be a challenge in the Phoenix real estate market, and while experts say the underwater rate will decline further, it likely won’t be enough to bring enough homes to the market to keep up with demand.
To learn more about Phoenix homes that are currently listed for sale, please contact me. I’m a local real estate agent who has helped countless buyers navigate the Phoenix real estate market.