In California, the Central Valley was one of the hardest hit Real Estate markets during the mortgage meltdown. However, housing market conditions have been improving, and Negative Equity rates are continuously falling. Negative equity is when a borrower owes more on their mortgages than their home is worth. A home with negative equity may sometimes also be referred to as an “Underwater” home. Negative equity can be caused by a decline in home value, an increase in mortgage debt or a combination of both.
A Healing Real Estate Market
As of the second quarter of 2015, 16.4 percent (or 24,890) of all residential properties in Fresno were in negative equity. This is a significant improvement to Q2 of 2014, when 20.1 percent (30,100) of all residential properties were in negative equity. It is also a significant improvement from the first quarter of this year, when 18.2 percent (27,347) of Fresno’s residential properties were in negative equity. While the negative equity rate is still higher than the national average of 8.7%, the rate at which the rate is falling shows a promising outlook for Fresno’s housing market.
It is estimated that home values will continue to rise over the coming year, which will lift more and more homeowners out of negative equity.