“People often say that motivation doesn’t last. Well, neither does bathring – that’s why we recommend it daily. ”
-Zig Ziglar: Motivational author and speaker
HOUSING PRICES: EXPLAINING THE RECENT UPTICK
Several pricing indices have reported that, on a month-over-month basis, home values have ticked up slightly over the last quarter. This has caused some to call the bottom to the housing market – at least from a price standpoint. We must realize that prices are determined by supply and demand.
Demand has indeed shown improvement in many parts of the country. However, the supply side of the formula is being impacted by legal issues. The number of foreclosures coming to market has been slowed dramatically by the courts as the banks still struggle with improperly filed paperwork. This inventory will eventually find its way to the market and again put downward pressure on values.
Here is a chart showing the challenge:
If you are selling, there currently is a window of opportunity to get your best price before the distressed properties are released.
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WHAT IF YOU COULD BUY SHOES…?
What if there was a shoe store that had:
An unparalleled selection of shoes of every size, color, and price range
The shoes were discounted 30% or more
You had a credit card that would finance the shoes for 30 years at 4.5%
How many shoes would you buy? My bet is there would be a line around the block. Well, today, real estate is like that shoe store (incredible selection, terrific bargains and excellent financing terms). But there’s more….
Shoes go in and out of style. Homeownership is still the American Dream.
Shoes are worth less once you wear them. Homes will appreciate in value over time.
Shoes get disposed of. Homes are lasting.
And while many can recount memories created in certain shoes, everyone can remember their first home, their first family gathering, the countless holidays shared. There is also the ability to decorate to your tastes, the stability (and lower crime rate) in homeownership neighborhoods and the higher level of education achieved by kids who grow up there.
If you’d stand in line to buy shoes, what’s stopping you from exploring a home? Despite some media perceptions, there is mortgage money available with reasonable down payment requirements at extremely low rates…talk to a loan officer. There are some great deals out there with short sales, foreclosures and regular transactions also!
FORECLOSURES FALL FOR 10TH STRAIGHT MONTH
Foreclosure filings dropped once again in July, hitting their lowest level since November 2007, as processing delaysand foreclosure prevention measures enabled a larger number of delinquent borrowers to remain in their homes.
Filings were down 4% compared to June and were 35% lower than July 2010, marking the tenth straight month of year-over-year declines, according to RealtyTrac, a leading online marketer of foreclosed properties.
RealtyTrac reported that 212,764 U.S. homes received some kind of foreclosure filing — notice of default, notice of auction sale or completed foreclosure — during the month. Bank repossessions totaled 67,829, down 33.6% from the peak month of September, 2010 — when banks took back 102,134 homes, and off 27% from 12 months earlier.
The steep foreclosure drop, according to RealtyTrac CEO James Saccacio, was triggered by a foreclosure processing slowdown that was sparked by the “robo-signing” controversy last fall. As a result of the scandal, in which the banks were accused of mishandling paperwork and failing to follow proper protocols, banks are being much more careful and many filings have been delayed.
“[T]he downward trend in foreclosure activity has now taken on a life of its own,” said Saccacio. “It appears that processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts, may be allowing more distressed homeowners to stave off foreclosure.”
There were some small glimmers of hope in RealtyTrac’s report. One promising sign was the steep plunge in initial notices of default, which fell 39% year-over-year to fewer than 60,000.
The decline may indicate that fewer borrowers are falling behind on payments.Or, it could mean lenders are not filing those notices as promptly as they have in the past, according to Rick Sharga, a spokesman for RealtyTrac.
The company analyzed initial default notices in California and discovered that the average sum of missed payments has risen to $78,000 from $17,000 over the past four years. Sharga attributed the jump to delays in filing the initial papers.
Getting rid of repossessed homes
RealtyTrac’s release came a day after the Federal Housing Finance Agency (FHFA), the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on how to dispose ofthe 92,000 repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).
Homeownership reaches lowest level since 1965
FHFA, the agency that supervises Fannie/Freddie, and HUD, which oversees FHA loans, want to be able to reduce that inventory quickly and in a manner that helps stabilize communities that have been hard hit by foreclosures.
They’re seeking proposals from private enterprises, municipalities and non-profits that will result in bulk sales and result in their refurbishment and eventual resale or rental.
Hardest hit markets
Among the markets where these efforts may be most concentrated are those hardest hit by the foreclosure crisis. According to RealtyTrac’s report, Las Vegas continued to record the highest rate of foreclosures in the nation, with a filing for every 99 homes, but the gap between “Sin City” and other metro areas has shrunk.
Foreclosure filings in Stockton, Calif. jumped 57% month-over-month, one for every 124 homes, the second highest rate.
Nevada continued to post the highest foreclosure rate of any state, one filing for every 115 homes. California, one in every 239 homes came in second place, and Arizona, one in every 273 homes, was third.