Headlines – Week of October 21, 2012

November 2, 2012

Are Banks Holding onto REOs?

In September, the HousingPulse Distressed Property Index (DPI) from Campbell Surveys, which measures the proportion of purchase transactions involving distressed properties, hit a record low of 38.6 percent based on a three-month moving average.

The drop marks the fifth consecutive monthly decline and is more than 10 percentage points lower than the February’s near-record-high of 48.7 percent.

According to HousingPulse, the lack of foreclosures and REOs available for sale is the reason for the steep decline in distressed sales.

According to HousingPulse, major banks seem to be keeping many REO properties off the market this year, but suggested banks may look to release “significant amounts” of bank-owned properties next year which could lead to lower prices.

Foreclosures ‘boil over’ in Judicial Foreclosure States

In an article posted in the last Headlines, RealtyTrac reported that foreclosures are continuing to fall across the country, reaching five-year lows, but states where foreclosures don’t have to be approved by courts are posting some of the largest drops.

While foreclosure-related filings were down sharply from a year ago, there was an increase in foreclosure activity in 20 states, particularly in states where courts handle the foreclosure process, including New Jersey, New York, Maryland, Illinois and Pennsylvania.  

The increase in short sales and foreclosures was predicted in judicial foreclosure states after the nation’s five largest mortgage servicers reached a $25 billion settlement in March over “robo-signing” allegations.

While foreclosure-related filings were down 31 percent collectively from a year ago in the 24 nonjudicial states and District of Columbia, some judicial foreclosure states saw big annual increases in foreclosure activity, led by Kentucky (up 73 percent), New Jersey (up 65 percent), New York (up 56 percent), and Maryland (up 54 percent).

Foreclosure-related filings were up from a year ago in 20 states in August, including Illinois, which posted the highest rate of any state with 1 in every 298 housing units. A total of 17,781 Illinois properties were subjected to a foreclosure-related filing in August, a 42 percent increase from a year ago.

Florida climbed to second on RealtyTrac’s list of states with the highest rate of foreclosure-related filings, with 1 in 328 properties subjected to a filing.

Until August, the top two spots on the list have been held by one of four nonjudicial foreclosure states since December 2010: Arizona, California, Georgia and Nevada.

10 states with highest foreclosure rate

Rank

State

August 2012 Properties with Foreclosure Filings

1/every X Housing Units

Percent change from July 2012

Percent change from Aug. 2012

1

Illinois

17,781

298

29.09

42.33

2

Florida

27,422

328

7.39

16.35

3

California

40,200

340

-4.47

-32.30

4

Arizona

7,899

360

-3.87

-28.72

5

Nevada

2,921

402

3.33

-69.82

6

Georgia

9,478

431

-12.73

-19.29

7

Ohio

9,218

556

-5.15

-6.33

8

Michigan

7,648

593

-12.66

-41.24

9

Delaware

665

610

180.59

1.68

10

Colorado

3,584

617

24.66

-27.35

Source: RealtyTrac

A New Housing Boom by 2015?

According to a recent article by CNNMoney, the housing market has been showing several signs of recovery, including home prices and home sales on the rise, new construction up, foreclosures falling and mortgage rates near record lows. As a result, some economists are getting very bullish about the housing recovery and even predicting that the market will return to its “boom” level days in just three years.

In a recent report, Barclays Capital predicts that home prices could be back to peak levels by 2015. Barclays is predicting home prices to rise 5 percent to 7.5 percent a year.

In the article, an analyst at Barclays is quoted as saying that the housing market underwent a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that will spark a rapid rise in housing starts.

Home construction is also expected to soar, rising 20 percent or more a year for the next year, according to some economists’ forecasts. The new-home market could return to its pre-bubble average of about 1.5 million new homes a year by 2016 according to the CNNMoney report. That would double the construction level expected this year.

Full Article

Posted by Scott R. Lodde

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