Underwater homes phasing out

One indication of an improving housing market is the dwindling number of underwater homes. Reports from several organizations now show a strong improvement in this area, which was formerly a major issue for many homeowners.

"The majority of homeowners have equity again. The number of residential properties that were seriously underwater - meaning the combined loan amount on the property is at least 25 percent higher than the home's estimated market value - represented 12.7 percent of all properties with a mortgage at the end of the third quarter."

This data was reported by the National Association of Realtors, quoting another study from RealtyTrac's latest Home Equity & Underwater Report.

The report also claims: "Percentage is down from 13.3 percent the previous quarter, and is now at the lowest level for both total mortgages and share of mortgages since RealtyTrac began tracking underwater data in 2012. Seriously underwater homes peaked in the second quarter of 2012, when it reached 28.6 percent of all homes with a mortgage. Since then, the number has been steadily decreasing."

The NAR report noted: "Homes most likely to still be seriously underwater have an estimated market value of under $200,000. About 20 percent of seriously underwater properties had a market value under $200,000 while just 5 percent of properties with values exceeding $750,000 were seriously underwater. Also, homeowners who have owned their home five to 10 years are the most likely to be seriously underwater (17.2 percent)."

Q. Are home sales up since we are into the fall season?

A. That depends on what you are comparing it to. One report shows that housing sales increased 8.9 percent from the same month a year ago, according to Real Trends.

"While down from year-over-year increases of the prior four months, indications are that housing continues to lead the economy. All four regions reported unit sales had increased from a year ago with the Northeast leading the way with an increase of 12.5 percent over a year ago.

"September housing sales slowed when looked at on a year-over-year basis. As predicted in earlier months, the lack of inventory in many markets, the strong appreciation in home prices and the strong U.S. dollar are causing the year-over-year slowdown in housing unit sales," the report noted.

Q. Is the share of mortgage applications used for refinancing increasing?

A. Yes. A report from Mortgage Bankers Association, received on Nov. 4, stated the following:

"The refinance share of mortgage activity increased to 59.7 percent of total applications from 59.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.7 percent of total applications."

Q. Are mortgage interest rates finally rising?

A. No. In fact, rates are still dropping. Freddie Mac reported in a recent news release that the 30-year fixed-rate mortgage averaged 3.79 percent with an average 0.6 point for the week, down from the previous week when it averaged 3.82 percent.

A year ago at this time, the 30-year FRM averaged 3.92 percent. The 15-year FRM that week averaged 2.98 percent with an average 0.5 point, down from the previous week when it averaged 3.03 percent. A year ago at this time, the 15-year FRM averaged 3.08 percent.

Q. Do condos appreciate in value like other homes?

A. Condos are appreciating faster than single-family homes in markets across the country - especially where job markets are thriving or urban renewal is underway, according to the third quarter Zillow September Real Estate Market Report.

"Condos in the U.S. are appreciating at a rate of 5.1 percent, compared to the 3.7 percent appreciation among single-family homes. Condo values crashed hard during the housing bust that kicked off the Great Recession. From the pre-recession peak to the lowest value, the median U.S. single-family home lost 20 percent of its value; from peak to bottom, the typical U.S. condo lost 33.2 percent of its value. The housing market has since bounced back, and condos have finally caught up to other homes."

• Email Jim Woodard at storyjim@aol.com.

© 2015, Creators Syndicate