Unemployment claims have spiked over the past month and consumer fear has spread. Many of the unemployed have found jobs in industries such as delivery, retail, healthcare, grocery stores, etc, however millions are still unemployed. There is high uncertainty in today's market and for this reason it is important to understand what unemployment means to homeownership and to understand the equity Americans have.
Today's major concern/fear is that the unemployment rate will cause a spike in foreclosures in the real estate market. People are questioning what the future with hold. It is important to note that although there were high foreclosures in the 2008 housing crash, we will not see the same in today's economy. The main factor differentiating today's housing market from 2008 is the equity homeowners have.
According to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity. That was not the cause during the 2008 housing crash. In 2008 the real estate prices dropped and many owners found themselves upside down on their homes. They owed more than they can sell their homes for. As a result, it was better for homeowners to walk away from their homes than continue making payments or selling.
Today, 42.1% of all homes in this country are mortgage-free. Those homes are not at risk for foreclosure.
CoreLogic noted that the average equity mortgaged homes have today is $177,000. This large equity is a reason people will not walk away from their homes and foreclose.
This equity positions homeowners in a much better place than in 2008 which will result in lower foreclosures.
Despite the uncertainty and fear that many are experiencing, the current market is stronger than 2008. Equity may be the most important factor that gets us through these hards times.
Interested in buying or selling? Trust South Florida Real Estate Experts at Prestige Waterfront Realty. Flagship office located on Galt Ocean Mile in Fort Lauderdale. Call PWR at 954-830-7000 or email Tegov@AskPWR.com.