November 24, 2009
The S&P/Case-Shiller home Price Index reported that of the 20 cities their report covers there was a 3.1% increase in home prices for the third quarter which ended September 30, 2009. No doubt the increase is small due to the fact that the majority of home sales were either distressed properties or foreclosed homes, but any increase is good news for everyone.
Generally speaking, any increase in home prices takes some of the pressure off of the lending institutions to dump troubled assets. This is good news for home buyers because as home prices increase lenders can be more confident in the value of the loans they originate, which means more loans available.
This is very good news for homeowners who may be facing foreclosure because when the value of homes increase the lender is more likely to work with homeowners on a loan modification or payment deferment program. For example, if your home had a value of $200,000.00 and a loan of $190,000.00 in the second quarter of 2009, you would only have 5 percent equity in the home. With the third quarter price increase your home now has a value of $206,200.00 which means you have an additional $6,200.00 in equity.
If you are looking for something to be thankful for, be thankful that home prices are increasing. If home prices were declining the lender would want to foreclose and get the homes off of their balance sheet before the end of the year. As we enter this holiday season, be thankful that more families will have a home to celebrate in this year than they did in December of 2008.