As per CoreLogic’s most recent report:
“The foreclosure rate is back to November 2008 levels.”
What does this mean? Completed foreclosures in the United States – of which there were 48,000 – fell 10.0% in March of 2014. Perhaps more importantly, the rate of serious delinquency fell 23.4%, which suggests that even fewer foreclosures are pending in the future.
You can download the full report here.
As of April 1, 2014, there were 46 REO and 135 Short Sale listings in the area we loosely define as the California Central Coast. Our target area includes San Luis Obispo County and northern Santa Barbara County cities like Lompoc, Santa Maria, and Santa Ynez.
Plenty of real estate news to cover so far this week, especially in the wake of the US census report on homeownership. We turn to Twitter for the news, which we have found to be a surprisingly good way to track the latest (give us a follow if you like this stuff!).
Foreclosure activity rose during May, but this time, the data suggests something of a positive indicator for the recovering housing market.
Lenders repossessions of homes rose 11% during May, for the first gain in five months, Bloomberg News reported on RealtyTrac data. In total, banks took back 38,946 homes.
The impetus for the increased activity comes as the housing market recovers. With home prices and demand for property on the rise, lenders see the benefit in moving into the final stage of foreclosure.
As a counterintuitive result, the strength of the housing market has actually spurred foreclosure activity. This is another small sign – similar to higher investor demand for jumbo mortgage debt – that the housing market is on the upswing.
San Luis Obispo County bucks the nationwide trend. According to RealtyTrac, pre foreclosure activity (-61.4%), auctions (-63.2%), and bank-owned properties (-72.1%) in SLO County all have significantly dropped year-over-year.
Buyers pay 22.7% for foreclosures, and this “foreclosure discount” is up 55.7% from April of 2012.
Foreclosures and REO sales have declined sharply in the 2013 San Luis Obispo County housing market, as we have seen from our county real estate overviews (see sidebar to the right). This has been one of the major stories of the new year.
Investors, first-time buyers, and single-family buyers began to purchase the discounted properties as the economy showed signs of life in 2011 and 2012. Meanwhile, banks turned to different methods to deal with the foreclosure problem, using principle reductions, short sales, and loan modifications to avoid the costly foreclosure process.
The supply of foreclosure properties on the market has dropped rapidly – both locally and nationally – but a recent Washington Post article points out that we aren’t completely through the crisis yet.
There have been 4.4 million foreclosures in the United States since 2008, causing homeowners to lose $200 billion in wealth for an average loss of $1,679 per household. Today, there are still over 13 million mortgages remain underwater.
Though the number of foreclosures has declined – there was 52,000 in April – this is still at two times the normal market pace. The article points out that the foreclosure problems are still having a devastating effect as poorer neighborhoods attempt to recover.
Read the full article here: Is the Housing Crisis Over? Maybe not for minorities
The United States economy grew less than expected during the first quarter, as the Commerce Department revised Gross Domestic Product down from 2.5% to 2.4%. Government “austerity” hurt the reading.
— Yahoo! Finance (@YahooFinance) May 30, 2013
Wall Street Journal reporter Ben Casselman points out that the GDP news has good news for income, which could help with the jobs situation.
Economic output looks (a bit) better when you focus on income rather than spending. That’s a good sign for jobs. on.wsj.com/ZgFSu6
— Ben Casselman (@bencasselman) May 30, 2013
Real Estate News
More foreclosure news. Despite decrease in foreclosure activity, 1 in 5 sales continue to be of distressed homes.
— Diana Olick (@diana_olick) May 30, 2013
Meanwhile, pending home sales hit a three year high in April. Despite constrained supply, demand appears to be holding out. Will rising mortgage rates put a damper on the real estate frenzy?
Mortgage rates continue to rise as the economy improves and speculation that the Federal Reserve will wind down its stimulus activity continues. (For a more detailed explanation, read here).
— HousingWire (@HousingWire) May 30, 2013
Lastly, the Making Home Affordable program (HAMP) has been extended through the end of 2013. The loan modification program helps homeowners modify loans and reduce monthly payments. More information here.
— HousingWire (@HousingWire) May 30, 2013
In March, the number of mortgages that are delinquent or in foreclosure fell below 5 million for the first time since 2008. From Nick Timiraos at the Wall Street Journal Developments blog, writing on a Lender Processing Services report:
- 1.69 million mortgage in foreclosure process in March, down 20% yearly
- 3.4% of US mortgage in foreclosure in March, down 4.2% yearly
- 3.31 million loans behind on payments in March
- 1.47 million delinquent loans had missed at least three payments
- 6.6% of all borrowers in some stage of delinquency (excluding foreclosure) down 3% yearly
Three main factors have helped the decline in foreclosure activity. For one, the market worked through a large portion of distressed properties, and the borrowers that remain are more committed to keeping their homes.
For another, lenders are increasingly turning to short sales, principle reductions, and loan modifications to avoid the costly foreclosure process.
Lastly, increases in home prices are helping more borrowers come out from underwater, thus giving them incentive to stay in their home and continue mortgage payments.
The stock market is on a historic bull run. The Dow Jones Industrial Average (DOW) is on pace for its 10th-consecutive positive close, and it has already destroyed its pre-bull run high of 14,164.53. Mid-day trading has brought the Dow up to 14,509.34 (+54.06).
Imagine that over the period of several years, the $200,000 in your bank account dropped in value to $130,000. When you went to the bank to withdraw the money, the teller says “sorry, your money is only worth $130,000.” This is exactly what the post-bubble real estate market did to home values.
There were 2 million fewer underwater mortgages in the United States in 2012, according to the Zillow Negative Equity Report. The fourth quarter saw the percentage of total mortgages that were underwater fall to 27.5%, down from 28.2%. Read more