By Cheryl Reid-Simons
Rising home prices are helping Aurora homeowners with underwater mortgages break the surface, according to a recent report by Zillow.
Nationwide, the percentage of mortgages in the United States that are underwater fell from 25.4 percent in the first quarter of the year to 23.8 percent in the second quarter. In Aurora, the figures are decidedly less soggy with Zillow reporting just 16 percent of mortgages underwater.
A home’s mortgage is underwater when the amount owed is greater than the value of the home.
When the so-called "housing bubble" burst, many homeowners in Aurora and around the country found themselves in negative equity. Ironically, eventually that’s part of what acted to bring prices back up.
One of the places most underwater in the United States is actually in the desert. Investors who took a gamble on Sin City real estate during the housing boom are still taking a bath, according to Zillow, which estimates that in parts of Las Vegas a whopping 69 percent of mortgages remain underwater. And, as with the rest of the country, that’s lower than it was just four months ago.
While foreclosures flooded the market early on, many homeowners eager to protect their credit ratings continued to make payments on underwater mortgages. But while they made the payments, they couldn’t sell. That reduced inventory and helped keep prices out of freefall.
Aurora real estate agent Velva Martell said she started seeing homeowners regain equity last year and the trend is continuing and seems to be picking up steam. Besides negative equity, Martell said homeowners have simply been skittish, waiting to see what the market does.
"Last year they were afraid to put them on the market for fear they wouldn’t sell," she said.
With prices increasing, more homeowners are beginning to think about selling.
"But we still have a shortage of homes for sale," Martell said.
Besides single family homes, Martell added that the Aurora’s sizeable condo market is increasingly healthy.
"Condos have sold very well this year," she said. "That’s a good thing for Aurora."