Phoenix-area home prices have been rising at an astonishing rate this past year, which also means fewer homeowners are underwater.

In fact, the Valleywide underwater, or negative equity, rate has dropped to slightly more than one third, or around 36 percent, according to the first-quarter negative equity report released Thursday by Zillow Inc. Negative equity is when a homeowner owes more on their mortgage than what their home is worth.

That’s a substantial improvement from one year ago when the figure was more than 50 percent.

So with that big year-over-year decline, metro Phoenix’s ranking for underwater homes has fallen from the second-highest slot to 10th highest, Zillow said. By the first quarter of next year, Zillow expects another 51,580 Valley homeowners will climb out of negative equity, dipping the area’s underwater rate to just under 30 percent.

Nationwide during the first-quarter, about one quarter of all homeowners with a mortgage, or more than 13 million, were underwater.

But with this encouraging news also comes a bit of a damper (sorry).

There’s this other figure in Zillow’s report called “effective” negative equity, which essentially refers to homeowners who are technically above wat

er but have less than 20 percent equity. Zillow says this is a notable figure to measure because when a homeowner doesn’t have at least 20 percent equity, they’re pretty much just as “stuck” as they would be if they were underwater.

“Reaching positive equity, even barely, is an important milestone. But things like real estate agents’ fees and a down payment for the next home traditionally come out of the proceeds from the prior home’s sale,” Zillow Chief Economist Stan Humphries said in the report. “Without enough equity, these costs will instead have to come out of a homeowner’s pocket, leaving many still stuck. Looking at the effective negative equity rate could explain why recent, healthy declines in the number of underwater borrowers haven’t yet translated into more homes for sale.”

Source: http://www.bizjournals.com/phoenix/news/2013/05/23/zillow-far-fewer-phoenix-homeowners.html?ana=e_du_pub&s=article_du&ed=2013-05-23&u=xSSE9L6KHYmw7J8aC9tGnUoyWS8&t=1369347414

• May 20, 2013 • 9:09am

The year’s solid economic start faded late in the first quarter, but the recent setback is a temporary one, analysts claim.

The slow in activity is partly due to ongoing fiscal drags, including the budget sequester. However, a modest reacceleration is expected in the second half of this year, as the housing market continues to gain traction, according to Fannie Mae’s economic outlook.

Housing is expected to act as a tailwind for the economy throughout the year and into 2014, even though there may be a few hiccups in overall economic activity.

“Our May forecast predicts that the second half of 2013 will be a little stronger than the first half, despite the slowdown during the past couple of months,” Doug Duncan, chief economist for Fannie Mae.

He added, “Employment numbers are getting better, albeit it at a relatively slow pace, and the April employment picture should help boost consumer sentiment toward the economy overall. However, we continue to keep an eye on potential headwinds to our forecast, including the long-term effects of sequestration, spending constraints, the sovereign debt crisis, and the impending debt ceiling.”

Residential investment contributed to economic growth for the eighth consecutive quarter, adding 0.3 percentage points during the first quarter of 2013.

Additionally, the annualized pace of total housing starts in March surpassed the one million market for the first time since the housing crisis, driven solely by a surge in multifamily housing.

Multifamily homebuilding has benefited from a shift in tenure choice over the past several years toward renting, according to Fannie Mae.

For instance, the homeownership rate continued to decline in the first quarter, dropping to 65% — the lowest rate since the third quarter of 1995, the report noted.

By contrast, new single-family home sales rose in March, jumping 51%, which is the biggest gain since the second quarter of 2003.

Despite the robust gain in new home sales in the first quarter, homebuilders’ confidence from the Nation Association of Home Builders’ survey continued to cool in April, declining for the third consecutive month.

“However, the details of the survey suggested improving outlook for the housing market: while both the measures of current sales and prospective buyer traffic fell during the month, the measure of sales expectations over the next six months increased sharply to a new peak for the expansion,” Fannie Mae analysts explained.

Meanwhile, the government-sponsored enterprise suggested that housing affordability will likely remain a support for the housing recovery.

However, affordability is no longer a primary driver of homebuying activity.

“Going forward, the trends in lending standards, regulations regarding lending and securitization of mortgages, and housing finance reform will be key to a transition to normal for the housing market,” the enterprise stated.

Furthermore, a positive for future home price trends is a decline in shadow inventories.

The shadow inventory rate has gradually declined from its record high of 9.7% during the final quarter of 2009 to 6.4% in the first quarter of this year.

“Overall, mortgage performance has improved meaningfully, with the combined share of loans at least one payment past due or in foreclosure falling to 10.3%, the lowest in over four years,” Fannie Mae analysts stated.

cmlynski@housingwire.com

Source: http://www.housingwire.com/news/2013/05/20/housing-will-reaccelerate-economic-growth-fannie-mae?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29

The days when large Wall Street investors had a plethora of foreclosures and short sales to convert into income-generating rental homes are gone.

But even with the housing market’s momentous recovery this past year, a RealtyTrac report released Thursday noted opportunities still abound for smaller investors in certain markets, including metro Phoenix.

RealtyTrac ranked the Valley No. 14 among the 20 best spots in the nation for individual investors on the hunt for single-family rental properties.

“Buying single-family homes as rentals that actually generate good monthly cash flow has become more difficult over the past year as institutional investors crowded into the market, snapping up tens of thousands of properties in 2012 alone,” Daren Blomquist, vice president of RealtyTrac, said in a prepared statement. “But there are still opportunities for the more conservative, individual investor to buy rental homes that generate a healthy return on investment — it often just takes persistence and willingness to pass on bad deals.”

The top 20 markets were those with the highest average capitalization rates — the percentage of a property’s original purchase price that is represented by annual cash flow from the property. RealtyTrac calculated cap rates and cash flow figures by analyzing median sale prices and average single-family rental rates for three-bedroom homes in areas with populations of at least 200,000 where such information was available.

In the Valley, RealtyTrac pegged the median price of a three-bedroom home at $112,396 and the average monthly rent at $1,369. (Both figures were the second-highest of all 20 markets.)

Full article here: http://bit.ly/Y0Nptl