Positive News for the Housing Market

There have been mixed signals within the local housing market . . . information providing “hope” mixed with a sudden mixture of bad news.  Although there is no true sign that a real recovery has taken hold, new statistical data points to a positive outlook.

HOME PRICES AND SALES INCREASING:

Sales have increased year to date over 8%.  The average national sales price the past 30 days was just under $190,000—up 7K from a month earlier.

THE “SHADOW INVENTORY” IS SHRINKING:

Shadow inventory refers to homes which are distressed (borrowers are very delinquent or already in the foreclosure process or the banks have already foreclosed on the property and it’s stuck in “legal limbo”) yet have not been listed for sale. Nearly 1.5 million properties are currently within the shadow inventory which equals a 4 month supply of homes.  However, the shadow inventory equaled a 6 month supply 1 year ago.  Obviously, the less shadow inventory the better for pricing due to there being less distressed homes coming to the market.

FORECLOSURES HAVE INCREASED:

As you are most likely aware, the robo-signing scandal cut back on the processing of foreclosures which created a backlog of distressed homes.  Back in March, the major banking entities reached a settlement which has allowed banks to restart their foreclosure assembly line.  The increase in foreclosures obviously hurts those losing their homes yet helps the housing market’s recovery in the long run since it allows banks to weed through the backlog of distressed property.

MORE EQUITY IN HOMES:

Homeowners have made the largest jump in home equity in more than sixty years. Nearly ½ of the borrowers who have refinanced paid down some of their debt and reduced their current loan balance.  Some are also refinancing into shorter-term loans which typically have larger monthly payments yet provide the ability to pay down principle balances much more quickly.  In fact, National mortgage debt is down 7% since 2007.  Unfortunately, home prices are down 23% over the same period, though.

Unless something comes about which places a dent in the broad economy, the housing outlook should become even better.