The lack of equity with many home owners is chiefly responsible for the increasing default rates and financing problems. The cash strapped individual doesn’t get the refinancing loan so vital for survival and cannot sell the house still under the mortgage loan. This double impact compounds the already muddled situation.
However, the percentage of homeowners with negative equity has reduced over the quarter; the value stood at 21 percent, from 23 percent earlier, for the families owning single homes. This can also be connected to the fact that those who were defaulting on their mortgage payments had to bequeath the home ownership back to the lenders and were foreclosed.
The home value index calculated by Zillow, primarily measuring the entire value of homes and not just the sold ones, remained fairly stable. The index reduced by just 0.4 percent over the last quarter. This should be some relief to sellers who were expecting the foreclosure rates to go up and the prices to roll down to new lows.
The sales in September comprised of 21.4 percent foreclosure re-sales, compared to 14.7 percent a year back. The value of homes showed a decline for the 11th quarter on the trot; the values slipped by 6.9 percent in the third quarter of this year. However, the rate of decline for home values was not very sharp.
There was an 11 percent increase in existing homes sales; it was the highest in the last two years. This was primarily due to the tax credit by the federal government, according to the National Association of Realtors. Pete Flint, who is the chief executive officer of Trulia, commented that the sales of homes have definitely increased, adding that many homes were priced too high. In addition, he also pointed out that the sellers need to reduce the rate of the homes to get the sales up, though it would be a really tough call to make.