For quite a few years during and after the economic downturn, negative equity – when more is owed on a mortgage than a home is worth - was a real problem for homeowners. And while some markets in the U.S. haven't quite crawled completely out of the situation, others certainly have. In fact, the National Association of Realtors this week released data showing the 10 markets in the U.S. where equity has improved the greatest since the fourth quarter of 2010. They are:
- San Jose, Calif.
- San Francisco
- Anaheim, Calif.
- Los Angeles
- San Diego
- Boulder, Colo.
- Riverside, Calif.
- Cape Coral-Fort Myers, Fla.
- Sacramento, Calif.
It's true that in Silicon Valley and San Francisco, we've seen some of the largest increases in home prices in the last year alone, boosted by a soaring tech economy and an overall lack of inventory.
This is great news for homeowners and the local economies that inevitably benefit from a strong housing market. But what many watch with caution is the long-term impact on housing affordability – especially for first-time home buyers and other classes of workers that are at risk for being priced out.
The interesting thing about these markets is that many of them are concentrated in the hardest hit areas from the housing downturn. For instance, Los Angeles, Riverside and Sacramento were all hit hard by the market decline, but have since seen sharp improvements in the last four years.
On the other end of the spectrum, NAR says in a blog post about the report, a number of markets that were in the bottom 10 for equity appreciation in 2006 did not see the same strong appreciation. These included Reno, Nev., Las Vegas and several Florida markets.
This is sort of telling about some of the ultimate truths about real estate – location and jobs are and always will be inextricably tied to the long-term health of local markets.
It will be interesting to see where these numbers lie at this time next year.