Housing markets rebound faster when foreclosures proceed quickly
Source: The LA Times
Appraisal industry experts have posited that real estate markets rebound much faster in areas where state law permits foreclosures to proceed quickly. Allowing homes with defaulted loans to move into new owners’ hands quickly prevents them from being tied up in court procedures for years, which negatively affects values of neighboring properties and the overall health of the housing market.
Making sense of the story:
—> Delays are most pronounced in judicial states, where post-default proceedings can stall foreclosure completions for two to three years or even longer.
—> The fastest-rebounding markets, comprised of strong sales, price increases and low inventories of unsold houses, were located in so-called nonjudicial states, where foreclosures can proceed without the intervention of courts.
—> Home-price recoveries are hindered when lenders are prevented from recovering and reselling the units to buyers due to legal limbo. Also, investors and other buyers can’t swoop in and return them to residential use rapidly.
—> Since California is a nonjudicial state, some of the best-performing market areas were Los Angeles and San Diego. In California, foreclosures now account for just 10 percent of all sales, while in slow-moving judicial states, 25 to 50 percent of sales are foreclosures.
—> The worst performers were judicial states. Specifically, Florida markets such as Tampa and Fort Myers, as well as parts of Illinois and Wisconsin.
Research reveals nonjudicial states bottomed out sooner than judicial states, and have seen greater appreciation since the bottom (typically 50 to 80 percent compared with just 10 to 45 percent for judicial states). Read the full story…
In other news…
White House Representative Speaks on Housing Finance Reform
Gene Sperling, director of the National Economic Council for the White House, recently discussed the president’s four major principles for housing finance reform at an industry symposium. Sperling emphasized maintaining widespread access to the 30-year, fixed-rate mortgage, and enhancing the role of private capital in the market. Read the full story…
New home sales surge in October
Source: The LA Times
The Commerce Department is reporting that sales of newly built single-family houses rose 25.4 percent from September to a seasonally adjusted annual rate of 444,000. Sales are up 21.6 percent in comparison to October 2012. Read the full story…
Mortgage loan quality improved in 2013
Home loan eligibility jumped to 96.44 percent in the first half of the year from 93.66 percent in 2012, according to a new report from compliance technology firm Quality Mortgage Services. Read the full story…
FHFA: Conforming Loan Limits Remain Unchanged
The Federal Housing Finance Agency has announced that the 2014 maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties in most areas of the country. There is a cap of $625,500 in high-cost areas. Read the full story…
Senate opens door for immediate housing finance reform
Source: The Hill
Due to the Senate’s elimination of the filibuster for presidential nominations, many experts believe Rep. Mel Watt (D-N.C.) finally will be as the next director of the Federal Housing Finance Agency, and with that change in leadership, there could be immediate major housing finance reform that provides greater access to the conventional housing finance market for a variety of buyers. Read the full story…
Key U.S. housing markets challenged by lack of multifamily builds
The latest building permit numbers indicate there were 387,000 authorizations for new multifamily units in October, which is an increase from the past two months. However, experts argue the number is too low and that equity financing for apartment projects is not growing. Read the full story…
Southland home buyers shifting to condos as house prices rise
Source: The LA Times
Since home prices jumped in price this year, southern California home buyers purchased fewer single-family homes in October due to affordability concerns. However, since condos are the only affordable path to homeownership in many urban areas, demand increased this year. Read the full story…
—> According to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.), California pending home sales rose in October, with the Pending Home Sales Index (PHSI) climbing 2.5 percent in October to 109.3, up from 106.7 in September, based on signed contracts. The monthly increase was considerably greater than the average September-to-October change of 0.7 percent over the past five years.
—> The share of equity sales – or non-distressed property sales – dipped slightly in October, but still made up more than eight in 10 sales, marking the fourth straight month that equity sales have been more than 80 percent of total sales.
—> Housing inventory levels tightened slightly for the first time in five months but were still extremely low. The Unsold Inventory Index for equity sales dipped from 3.5 months in September to 3.4 months in October.
Thanks for reading,