RealtyTrac, one of the leading online marketplaces for foreclosure properties released its first U.S. Foreclosure Sales Report, which shows that foreclosure homes accounted for 31% of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27% below the average sales price of properties not in the foreclosure process.
Foreclosure sales accounted for 64% of all sales in Nevada in the first quarter, the highest percentage of any state. California posted the second highest percentage, with foreclosure sales accounting for 51% of all sales there in the first quarter Other states where foreclosure sales accounted for at least one-third of all sales were Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon.
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After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market — but maybe they’re being too optimistic.
In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com’s chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.
The four myths:
1.The housing recession is over. It’s not, Humphries said. He estimates the bottom in home prices won’t come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation. Note: Realtytrac’s Rick Sharga disagrees…he is estimating that we are well over a year away from any sort of ‘bottoming’ in home values.
2.After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. “Once we hit bottom, the bottom is going to be a long and flat affair across the markets,” he said. “What we’re going to see once we hit bottom is the second phase of the housing recession… that second phase is one of being flat.” Note: Excellent point that agents need to understand. Once home value depreciation finally levels off..we will experience years of flat or no home value appreciation. Realtors, STOP saying that homes are a great ‘investment’. Speaking in strictly financial terms, homes are NOT a great investment.
3.The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn’t envision foreclosure activity stabilizing until late 2011.
4.The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. “The biggest impact [in home sales] we believe were low prices… low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration.”
I want to acknowledge Realty Trac and Zillow for their contributions.
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 10.06 percent of all loans outstanding in the first quarter, up 59 basis points from the fourth quarter, and up 94 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. When you consider that current loans in the foreclosure process already are not being counted, the numbers are very sobering. The percentage of loans in the foreclosure process at the end of the first quarter was 4.63 percent, an increase of five basis points compared with the fourth quarter of 2009 and 78 basis points from one year ago. That difference from a year ago is very dramatic, no matter how one wants to spin it.
Foreclosures continue to be a big issue in the marketplace. With the prospect of a lot of adjustable rate mortgages taken out in 2007 and 2008 readjusting in 2012 and 2013, it looks we may need to hunker down for the long haul.
According to Realty Trac, California accounted for 23% of the nation’s foreclosures for the first quarter of 2010-The highest foreclosure activity in the nation. Florida claimed the number two position followed by Arizona.
Despite close to a 5% decrease in foreclosure activity from the previous quarter, Illinois had the fourth highest foreclosure activity in the nation. Folloowing its decrease from the previous quarter, its increase was 17% over the first quarter of 2009.
Michigan, in fifth place, was up 38% from the first quarter of 2009 and 11% from the last quarter of 2009.
The following states round out the top 10 with foreclosure activity nationally: 6th-Georgia, 7th-Texas, 8th-Nevada, 9th-Ohio and 10th-Colorado.
One could surmise from the volatility of the numbers from quarter to quarter and year over year that we are not at a place called “market stability” yet.
