Since the financial crisis and subsequent price devastation in the real estate market that began around 2007-2008, home prices have rebounded and by extension the number of American homeowners suffering negative equity or underwater mortgages has declined!
In 2013 alone 3.9 million mortgages rose to positive equity positions with the percentage of mortgages that are underwater dropping to 20%.
It is expected that by Q4 2014 this number will fall close to 17% although over 9 million mortgages will still remain in a deficit position.
The problem now, however, is that the rate of increase in home values spurred partially by supply and demand factors has slowed and that many homeowners, while not underwater, are faced with effective negative equity (equity less than 20%) making selling and then buying much more difficult.
This video courtesy of CNBC tells the story.
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Video H/T TRDGoogle+