The number of Sacramento homeowners with underwater mortgages fell significantly this spring and home prices increased throughout the Sacramento region. During the April, May, and June period, the number of Sacramento homeowners with mortgages exceeding their home values dropped 18 percent. If you have been waiting for a while to consider selling your home in Sacramento, you just might have enough equity to sell your home. And if you’re looking at Sacramento real estate or considering buying a home in Sacramento, more homes are coming online and into the market that it just might make sense to buy a home while mortgage rates are still reasonably low.
At the end of the second quarter of this year, there were about 86,500 underwater mortgages in the Sacramento area, which is a dramatic reduction from the 124,000 mortgages that were underwater in the first few months of 2013. Strong home buyer demand and a very tight supply of homes for sale have driven home prices higher, reducing the number of homeowners with underwater mortgages in the Sacramento area.
In the counties of Sacramento, Placer, El Dorado, and Yolo, home prices increased by almost 26 percent year over year, from June 2012 to June 2013. This is really an incredible recovery in home prices. Sacramento home prices bounced off their early 2012 lows when investors and then traditional homebuyers entered the market to purchase undervalued homes, fueled by interest rates that were at a record low.
At the end of June there were another 15,000 Sacramento area homeowners close to regaining equity in their homes. Over the first half of 2013 and especially the second quarter, Sacramento home price appreciation clearly had a positive impact on home equity. However, with the end of the traditional spring and summer buying season, the rapid rise in home prices is expected to slow down. A greater inventory of homes for sale in the Sacramento area will help stabilize the market as home sales continue to occur.
Interest rates are creeping up but remain well below historic averages and Sacramento home prices remain affordable compared to the housing boom and excesses of last decade. As more Sacramento homeowners regain equity, many will want to move to bigger or smaller homes or to a different location, having been hostage by underwater mortgages and no ability to sell for years.