Destiny Homes: Home Remodeling Increases As Home Values Increase And Build Homeowners Equity
CoreLogic Residential Properties Equity Improvement Report shows that the number of negative equity homes across the US improves as shown by CoreLogic's report.
US Housing Outlook Improves: 1.3 Million Households Gain Positive Equity.
CoreLogic released a report announcing that the number of residential properties in negative equity continued to decrease in the second quarter of 2012, amounting to over 1.3 million households freed by tipping the value of their home's equity status from "underwater" to "overwater". Destiny Homes, a Minneapolis home builder and Eden Priairie home remodeler, helps homeowners renovate their homes to their liking while prioritizing value added projects that increase long-term equity.
It Is A Great Time For Remodeling Your Home As Home Values Increase And Reports Of Positive Equity Are Up
Destiny Homes sees positive expectation of home values containing to rise with the good news for 1.8 million homeowners who are only underwater by 5% or less. Butch Sprenger said, " I like Anand Nallathambi's, president and CEO of CoreLogic outlook that these properties could move into positive equity territory if home prices continue to improve as anticipated".
CoreLogic Residential Properties Report Highlights:
Home builders outpace expectations for new construction and home remodeling projects, contributing to the increases in homeowners home equity.
* 10.8 million, meaning 22.3 percent, of all residential properties with a mortgage were in negative equity at the end of the second quarter of 2012.
* This is down from 11.4 million properties, or 23.7 percent, at the end of the first quarter of 2012.
* An additional 2.3 million borrowers possessed less than 5 percent equity in their home, referred to as near-negative equity, at the end of the second quarter.
* Approximately 600,000 borrowers reached a state of positive equity at the end of the second quarter of 2012.
* More than 700,000 home borrowers moved into positive equity in Q1 of 2012.
* Over 1.3 million households regaining a positive equity position since the beginning of the year.
* The share of borrowers still underwater but current on their payments was 84.9 percent at the end of the Q2 in 2012, up from 84.8 percent at the end of Q1 in 2012.
* Average mortgage balance of underwater borrowers is $300,000, the average underwater amount is $84,000 and the cumulative underwater amount accounts for 38 percent of all negative equity.
Fed Encourages Homeonwer To Renovate
Some homeowners have sat on the fence, wanting to remodel their homes, while waiting to see home values on the increase to see if it makes sense in terms of investment dollars. Two of the best investment home remodeling projects homeowners can make are kitchen remodels and bath upgrades. If you think about it, that makes sense because these rooms with the highest levels of daily activity. Top quality appliances, spacious bathrooms, and quality construction will go a long way in helping attract buyers. In many cases you can expect to receive about 75-90% of the cost of remodeling one of these rooms. Many homeowners have taken good advantage of federal and state rebate offers that encourage homeowners to upgrade windows or buy new appliances.
Negative Equity and Positive Equity Determine Your Homes Value
Negative equity, or a commonly referred to, "underwater" or "upside down," means that the homeowner owes more on their mortgages than their homes are worth at current market values. That can occur because of a decline in local real estate market value, an increase in mortgage debt or a combination of both.
Home Equity And Homes Value Are Climbing Again
Harvard Housing Study called "Ready For Renewal: Improving America's Housing 2013", reports a welcome reverse in the housing market, showing how precisely home remodeling increases as homeowners have an increase in home values. According to the report, "In 2011, owners with under 20 percent equity in their homes spent about 22 percent less on average on home improvements and about 30 percent less on discretionary projects than owners with at least 20 percent equity". Drawing from US Census Bureau figures, Harvard's Joint Center estimates that homeowner improvement spending jumped at a double-digit pace in the second half of 2012. Even better news is that the Joint Center’s Leading Indicator of Remodeling Activity (LIRA) points to continued gains for home builder requests for remodeling work through 2013.
After several years of strong house price appreciation, homeowners nationwide had almost $13 trillion in equity in 2006, or almost $170,000 per owner on average. By 2011, however, aggregate home equity had dropped by half to $6.5 trillion, or $87,000 per owner. Since home equity is a major source of wealth and security for most home owners, our recent years in downtrun and lower home values left residents feeling less wealthy, and therefore less likely to spend in general, and on home improvements projects in particular.
Positive equity can occur when local real estate markets show an overall increase in home values. Homeowners who manage their home upkeep well and make wise remodeling choices benefit their home's equity and may increase their neighborhood market as well. Homeowners build equity in their home every month when they make a mortgage payment, or better yet, a double mortgage payment. Another lead opportunity for a homeowner to see a rise in their home property value is when they make well-chosen home improvements. The addition of luxury features in demand by home buyers, security systems, and well-designed landscaping can raise the value of the property, further increasing the equity.
Americans Benefit From Healthy And Growing Economy
Additionally, yesterday, following the FOMC meeting, Fed Chairman Ben Bernanke said, "While low interest rates impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates promote". If Bernanke is right, "not only is now a fiscally responsible time for homeowners to build, it is also good timing for home renovations and the construction industry", said Butch Sprenger.
Minnesota Home Values Place Above Average
CoreLogic's data shows a wide variance by state in home equity rates. It listed Nevada with the highest percentage of mortgaged properties in negative equity at 59 percent, followed by Florida (43 percent), Arizona (40 percent), Georgia (36 percent) and Michigan (33 percent). These top five states combined account for 34.1 percent of the total amount of negative equity in the U.S. Minnesota is above average with a 17.1% negative equity share.
Download CoreLogic's Residential Homeowners Positive / Negative Equity Report
Download the U.S Housing Stock Ready For Improvement Press Release
Download Bernanke's Press Release on Lowering Interest Rates.
Butch and Liz Sprenger, owners of Destiny Homes Remodeling And Renovation Services Home page: www.destiny-homes.com. Service the entire Twin Cites Metro, from our main office in Deephaven, MN working as home Remodeler and owner of Destiny Homes.