Good news for the housing market – at long last the number of underwater homeowners is starting to look reasonable. Not good, mind you, but at least reasonable. That’s cause to celebrate after a long time of looking pitiful.
The magic number as of last quarter was 12 percent. That means only 12% of mortgages are higher than the value of the homes they’re for. Which is amazing considering how high it ranged during the height of the crisis. We started off just this year at 19%.
However, sometimes the future gets a little bit cloudy even as the silver lining starts to appear. We’re seeing a definite trend in the market to caution. Loans are still going to be hard to come by. Credit scores are dropping steeply (down 20 points on average this year) and lenders are still pretty cautious. Home loans offer monthly payment options that you can comfortably afford.
This is a lesson and an opportunity. We can’t predict the future and there are always trade offs. But when the time is right a person with a good eye can spot the right deal and make his move. I always advise caution but I know that taking the right kind of risk can pay off big.
Delinquencies are down, refinances are declining, and unemployment is dropping. These factors mean there are going to be people looking to buy and people looking to sell. It’s a gold mine if you know where to look.