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According to the Federal Reserve, about 6.3 million homeowners owe more on their homes than they are worth!
Our nation's home equity totaled $10.8 trillion dollars at the end of the 1st quarter. The record was $13.4 trillion in early 2006. The 1st quarter increase was $795 billion dollars. CoreLogic reports that 312,000 homeowners moved out of negative territory in the first 3 months. CoreLogic projects that a 5% home price increase in the next 12 months will bring an additional 1.2 million homeowners out of "real estate purgatory." Nice!
The sobering news is that 6.3 million number. That's a lot of people. And, the average negative equity amount is 33% more than the home 's fair market value. Ouch! 29% of homes in Nevada and 27% of homes in Florida lead the country in negative equity. My state, California, which experienced home value losses of 50%+ in some areas, has rebounded beautifully, and finds 11%+ of its homes with negative equity.
Where is equity highest? Texas. Only 3.3% of homes there have negative equity. Home prices remained modest and affordable during the boom. We do a lot of business in Texas, a state that also has the highest number of seller financed transactions.
In June's issue I talked about seller's looking for the "emotional equity" in their buyers' motivation. The above reports indicate a definite turn in "financial equity" in our real estate market. But, if you are a seller offering to carryback, don't fall back into the thinking that the "rising market" will increase my buyer's equity, so, I don't have to demand a significant downpayment. Always demand a significant downpayment, then negotiate from there.
"Follow your heart, but take your brain with you." Alfred Adler.
How Does Your Credit Card Balance Look?
In another report, the Federal Reserve states that American consumer credit balances hit an all time high of $3.14 trillion dollars by the end of March, 2014. Consumer credit declined steadily during 2009 and 2010 as most of us consolidated, paid down debt, and did our best to deal with the recession. Looks like we are buying cars and going on vacations.
"Money can't buy happiness, but it can get you a red convertible you can drive while you are looking for it." John Groom, CPA.
Sobering Articles on Housing
In the last 30 days, I have read several articles that get one thinking about our housing market and where it is going. I will refer 3 of them to you, and the headlines hopefully will entice you to read them:
"Phantom Household Formation and the Lost Generation." www.bizcatalyst360.com/phantom-household-formation-lost-generation.
"Is it Safe for Lenders to Lower Credit Score Minimums?" www.bizcatalyst360.com/why-it-s-safe-for-lenders-to-lower-credit-score-minimums.
"Real Estate Boom Bill Comes Due." www.bizcatalyst360.com/real-estate-boom-bill-comes-due.
"The difference between fiction and reality? Fiction has to make sense." Tom Clancy, Author.
"France executed people with the guillotine until 1977." Tidbits, Inc.
California - Always a Leader
About 20 years ago, a man I was doing business with stopped at a red light in Sherman Oaks, California. It was about 1pm. His car was a brand new Jaguar. Suddenly, a guy runs up to the driver side, opens the door, pulls my friend out of the car, hits him in the head with a gun butt, and drives off with his car.
That same year, another friend had a lunch appointment in a big office building in downtown Los Angeles. His car? A new Mercedes. The attendant opened the door, my friend got out, then watched in total disbelief as the attendant jumped in the car, floored the gas pedal, and took off with my friend's car.
Both men and vehicles were eventually found.
I bring this up because California led the nation in auto thefts last year - 176,000+. No other state is even close, Texas being second with 69,000+. We are a leader in a lot of things, of course, most of which you probably don't care for and may be tired of reading about. I know we have more cars than any other state, but it would be nice to lead the nation in something positive for a change. Stay tuned!
Worldwide, more than 294 billion emails are sent and received daily. An estimated 90% are spam or viruses. Tidbits, Inc.
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If I can make it better, tell me.
Denny Stanz
Note Broker
CA #01915404
760-245-5366
760-245-5367 fax
dennystanz@verizon.net
www.CaliforniaNoteBuyerLLC.com
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