RSF Market Update: Single Family Homes

No Comments

Tuesday, January 24th, 2012, 12:40 pm

Mortgage servicers filed roughly 61,500 notices of default in California during the final three months of 2011, down nearly 12% from the same level the year before, according to real estate analytics firm DataQuick.

The pace is the second-lowest level in more than four years. In the second quarter, notices of default totaled roughly 56,600 but increased the next three months to more than 71,200.

From there, DataQuick said, new foreclosure filings dropped 13.7% in three months ended Dec. 31. More than half of those notices of default were filed by Bank of America (BAC: 7.27 -0.27%), Bank of New York Mellon (BK: 20.82 -1.98%) and Wells Fargo (WFC: 30.17 -1.21%).

DataQuick said the peak occurred in the first quarter of 2009 when mortgage servicers filed more than 135,400 default notices. DataQuick President John Walsh said it’s difficult to tell if the lower numbers, which are half the levels of two years ago, are a result of an actual recovery in the market or shifts in policy.

“Five years ago almost all mortgage payment delinquencies would have triggered a default notice after a certain amount of time,” Walsh said. “Strategies now include short sales, refinances, interest rate changes, principal reduction as well as just plain waiting longer. It will be interesting to see how this plays out as the economy improves and the housing market finds its footing.”

The steepest decline came in Madera County, just north of Fresno, Calif., where notices of default dropped nearly 32% from the end of 2010.

Borrowers were behind a median of nine months on the mortgage before the lender filed a notice in the fourth quarter. The loans that completed foreclosure in that period spent an average 9.7 months in the process, up from 8.8 months a year earlier.

Most of the mortgages hitting foreclosure were originated in the middle of 2006. This has been the case for three years now, indicating how weak underwriting standards were then, DataQuick said.

The share of REO as part of the market in California dropped to 33.7% in the fourth quarter, down steadily from a peak of more than 57.8% in the first three months of 2009. Short sales, meanwhile are growing slightly more popular, reaching 19.8% of all home sales from 16.4% at the end of 2009.

No Comments

CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.

In the first release of CoreLogic’s new MarketPulse newsletter Wednesday, Fleming explained his rationale for such an assessment.

He notes that housing is an industry with long business cycles. Regional housing recessions have typically taken anywhere from three to five years to find their bottom, and Fleming says the national housing recession has behaved similarly in that it has bounced along a bottom for the past two years.

Fleming points out that housing affordability is rising dramatically due to a combination of home price deflation and rock-bottom mortgage rates. In fact, he says, after adjusting for inflation, this has been a “lost decade” for housing as prices are the same as at the beginning of the millennium.

“The time is right in 2012 for prices to begin growing again,” Fleming said, “and housing affordability will put a floor under any further significant declines.”

Fleming says he will be watching the spring and summer buying season closely for positive signs of demand.

He points out that households are paying off their debts and at the same time accessing credit more easily, with some even adding Home Equity Lines of Credit in the third quarter of last year – the first such movement for these second-lien mortgage products since the financial crisis began.

Fleming cites a quarterly survey by the New York Federal Reserve Bank, which shows total household debt continues to decline. At the same time, consumer sentiment rebounded strongly in the latter part of 2011, posting a six-month high in December – an indication that consumers’ confidence in the strength of the economy is growing, according to Fleming.

Most housing statistics basically moved sideways in the latter part of 2011, but Fleming finds several positives in the numbers. Although market indicators are coming off of very low levels, he notes that both existing-home sales and single-family housing starts have begun to increase, homebuilder confidence is improving, and affordability is at an all-time high.

Putting all of these statistics together suggests that while there is a very long way to go, the housing market is likely to sustain these upward movements in 2012, according to Fleming.

“While we cannot say with a high degree of certainty what 2012 has in store for us, indications based on the latter part of 2011 are that both the broad economy and the housing market are moving toward positive growth in 2012,” Fleming said.

He concedes that some impediments do exist, including slower global economic growth, a recession in Europe, and fiscal and political uncertainty in the United States.

But Fleming says when you look at the big picture, “we are bullish on the prospect of improving economic performance in 2012 from 2011.”

No Comments

The Harwood Group in Lithuanian

No Comments

No Comments