Summit Valuations, LLC, a full service valuation company, revealed its October Residential Real Estate Market Overview, which is based on data collected in August, the most current industry information available, according to a report released by the company.
In the report, Summit Chief Valuation Officer Mark Melikian looks at negative equity and housing supply to assess their impact on the industry.
“The fact that there are still a significant number of homes in a negative equity position exacerbates the housing supply shortage,” Melikian said. “Homeowners with negative equity will not be sellers if they can avoid it. Writing a check at closing, or listing your home as a short-sale property are not attractive options for most sellers. While past reports have focused on the need for new construction to increase, and the specific need for an increase in the supply of entry-level priced housing (April 2017), negative equity can be added to the list of reasons we currently have a limited supply of housing for sale.”
Negative equity remains a problem, even nearly a decade into the housing recovery. Melikian pointed to a recent CNBC.com article by Diana Olick in which she provided some insight into the continuing phenomenon the residential real estate market has been experiencing, the report said.
Despite years of price appreciation on a nationwide basis, there are still sections of the country where homeowners are experiencing “negative equity.” CoreLogic puts the number at 5.4 percent of all mortgaged properties.
According to data Olick shared in her article, “Markets with the highest share of negative equity on mortgage properties are Miami (14.7 percent), Las Vegas (12.2 percent), Chicago (10.8 percent) and the Washington, D.C., metro area (7.2 percent).”
“We now know that these markets were among the hardest hit during the market's downturn, and it would make sense that home prices in these areas will take longer to fully recover,” Melikian said. “Even though current housing inventory levels are low.”
As for the monthly statistics: In August 2017, the median sales price and mortgage interest rates both increased on a year over year basis. The seasonally adjusted number of homes sold, the supply of existing homes, the pending home sales index and the unemployment rate all decreased year over year.
On a regional level, the South had the highest number of existing home sales and the West had the highest median price. The Northeast and Midwest experienced a month over month increase in the number of seasonally adjusted existing home sales while the South and West saw a month over month decrease. The West experienced an increase in the median sales price month over month, while all other regions experienced a price decrease.