Positive News for the Housing Market
There have been a number of mixed signals from the housing market—bursts of hope then a mix of sudden disappointing news. There has not been a solid indicator showing that a real recovery has taken place yet new data coming to the forefront makes me optimistic.
HOME SALES AND MEDIAN PRICING IS ON THE RISE. Nationally, the average sales price w/in the past month (30 days) was nearly $190,000—up 7K from a month earlier. Home sale transactions were up 8.2% during this time. All in all, the market is continuing its trek toward normalcy.
THE “SHADOW INVENTORY” IS DIMINISHING. The “shadow inventory” is a term for homes which have been foreclosed upon yet have not hit the public market or homes in which the owners are drastically behind on their payments and are on the verge of foreclosure. There were approximately 1.5 million homes which could be considered a part of the shadow inventory. This equals a 4-month housing supply—down from a 6 month supply the same time last year. A minimal shadow inventory is positive for hoem pricing since it means that there will be less distressed homes coming to the public market.
FORECLOSURES ARE UP. Late in 2010, the robo-signing scandal emerged over the banks faulty foreclosure filings which cut back on the processing of foreclosures. This built up a backlog of distressed property. Recently, banks agreed to a 25 million settlement and updated data is showing that lien holders are restarting the foreclosure assembly line. In May there was a 9% increase in foreclosure filings from April of 2012. Obviously, the foreclosure up-tick huts those who are locing their homes yet helps the housing market in the long run.
BORROWERS ARE BUILDING MORE EQUITY IN THEIR HOMES. Homeowners have made the largest jum in building equity within their home in more than 6 decades. Nearly 50% of the borrowers which are refinancing pay down some of their debt. Some are also refinancing into 15 year mortgages that have higher monthly payments yet enable the loan to be paid much more quickly. All of this said, mortgage debt is down 7% since ’07. This, of course, is just a small consolation for the overall decline in home values of 23% since that same time period.
Unless something comes along to dent the economy and housing market, the overall housing outlook should become even better. Fingers (and toes) crossed!!