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» IS NEGATIVE EQUITY PART OF THE NEW NORMAL? Fast-paced price increases have helped bring many underwater homeowners afloat. In the third quarter, 1.4 million homeowners rose to the surface as their home values once again outranked their equity, according to the Zillow Negative Equity Report released last month. Nationally, the negative equity rate now stands at 21 percent, down from 23.8 percent in the second quarter and down about one-third from its peak of 31.4 percent, according to Zillow. If you include all homeowners who have less than 20 percent equity in their homes— something Zillow calls the "effective" negative equity rate since 20 percent is about what's needed to cover expenses associated with selling and purchasing a new home—is even higher at 39.2 percent in the third quarter. Nevertheless, the third-quarter drop in the negative equity rate was the largest on Zillow's record, which dates back to the second quarter of 2011. "Rising home prices and a greater willingness among lenders to engage in short sales have both contributed substantially to the significant decline in negative equity this quarter," said Stan Humphries, chief economist at Zillow. "We should feel good that we're moving in the right direction and at a fast clip." However, with analysts—including Humphries-- predicting moderating price gains in the coming year, that "fast clip" is set for decline. In fact, Humphries says negative equity will remain a persistent trait of the housing market and become "part of the new normal" for several years. While 4.9 million homeowners have risen above-water since the negative equity peak in 2011, one in five homeowners with a mortgage remains underwater today, according to Zillow's data. That's about 10.8 million homeowners currently in a negative equity position. More than half of underwater homeowners are underwater by at least 20 percent, Zillow says. Assuming Zillow's estimate for home price growth of 3.8 percent over the next year, it will take a homeowner with 20 percent negative equity five years to rise to the surface. Of the nation's 30 largest metros, those with the highest concentration of negative equity are Las Vegas at 30.6 percent, Atlanta at 38.2 percent, and Orlando at 34.2 percent. S E R V I N G T E N N VISIT US ONLINE @ DSNEWS.COM E S S E E Celebrating 25 years of service to our clients "We are on top of the changing regulations and stay ahead of our competition by being a leader in training and support in the state of Tennessee." O U R S E R V I C E S I N C L U D E : FORECLOSURE | EVICTIONS | REO CLOSINGS | BANKRUPTCY TITLE RESOLUTION | DEEDS IN LIEU | LITIGATION A F F I L I A T I O N S : Real Estate Owned Managers Association (REO Mac) United Trustees Association (UTA) California Mortgage Bankers Association (CMBA) American Legal & Financial Network (ALFN) Mortgage Bankers Association (MBA) 901-767-5566 Phone 901-761-5690 Fax jlipford@logs.com Email W W W. K I R S C H AT T O R N E Y S . C O M 27

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