Interesting concept to think about. Home owners who owe more on their mortgage than their home is currently worth actually may be helping to drive up home prices in certain markets, suggests CoreLogic in its July MarketPulse report.
These underwater home owners, who can’t afford to take a loss on the sales price of their home, are refusing to sell. As such, inventories are shrinking, giving buyers fewer options to choose from and lifting prices, according to the report.
Housing markets that are seeing some of the highest appreciation are also in states that have some of the highest number of underwater homes, according to CoreLogic.
“Negative equity is keeping many potential sellers out of the market, which keeps a lid on inventory and combined with the reduced flow of REO properties has led to much tighter market conditions for lower priced properties, particularly in the hardest hit markets,” according to CoreLogic in its report.
Source: “CoreLogic: Negative Equity Pushes Prices up in Certain Markets,” HousingWire (7/16/12)