“Sure it’s an indication that the mortgage market is improving,” Steve DeMorett, a broker with SJD Mortgage Services, told Mortgage Professional America.
According to stats released by RealtyTrac Thursday, the number of seriously underwater properties dropped 525,000 in Q3 from the previous quarter.
It’s good news for brokers, as the drop in underwater properties points to improving home prices – meaning industry players are more likely to win higher commissions on mortgage originations than they were just a year ago.
More impressively, underwater homes were down 1.2 million year-over-year.
“After a lull late last year and early this year, home sales volume and average sales prices picked up dramatically again in the second and third quarters of this year, resulting in a substantial drop in seriously underwater homeowners,” said Daren Blomquist, vice president at RealtyTrac. “On the other hand, the number and share of equity rich homeowners also dropped dramatically between the second and third quarters — continuing a trend from the previous two quarters — evidence that more homeowners in this category are leveraging their equity through a refinance, move-up sale or by completely cashing out of the housing market.”
Distressed properties also fell to the lowest level since Q1 2012. At the end of the third quarter, 33.4% of properties in some stage of foreclosure were underwater – a 5.5% year-over-year decline.
Florida continues to lead the way in terms of underwater properties.
The top markets for underwater home, according to RealtyTrac, are: Lakeland, Florida, (28%), followed by Las Vegas, Nevada (27.3%), Cleveland, Ohio (27.2%), Deltona-Daytona Beach, Florida (26.7%), Orlando, Florida (25.6%), Tampa, Florida (24.3%), Toledo, Ohio (24.1%), Chicago, Illinois (24%), Palm Bay, Florida (24%) and rounding at the top 10 Jacksonville, Florida (23.8%)
The number of underwater mortgages has dropped drastically year-over-year – and it’s good news for originators and the market as a whole, according to one industry professional.