The hidden supply of bank-owned properties (REOs) and
pending foreclosures will likely take 33 months—or nearly three years—to clear
if liquidation rates hold steady, according to a recent report by Standard
& Poor’s. Even more unsettling is hat S&P called its estimate “conservative”
because the company’s analysis was based on the number of properties the
company believes to be lurking in the shadows now—repossessed homes that banks
have not put on the market and already delinquent mortgages that will likely
turn into foreclosures. The assessment does not take into consideration any
loans that have yet to show serious signs of distress.
The ratings agency did not give a specific number of loans
in its calculated shadow supply but said the original balance of currently
seriously delinquent and REO loans is $426.3 billion. An earlier study by
Amherst Securities estimates the shadow inventory represents some 7 million
loans, while First American CoreLogic puts it at 1.7 million. Analysts at
S&P contend that the “recent positive housing reports should not be
construed as a sign that the distress in the residential housing market is
abating, but rather should be attributed to the temporarily limited supply of
homes on the market.”Foreclosure delays
from the government’s Home Affordable Modification Program (HAMP) are expected
to depress home prices another 8 percent over the course of 2010, says S&P.
San DiegoCounty: Home Sales Down
San DiegoCounty home sales dropped
15.2 percent in January compared to January 2009, according to the most recent
report from the California Association of Realtors. And, the median home price
in the county rose 10.4 percent compared to a year ago. Statewide home sales
decreased 10.6 percent in January with the median home price rising 15 percent
compared to January 2009. The median
price of a home in the county stood at $466,780 in January, which is 4 percent
lower than in December 2009 and January’s sales were 38.5 percent below those
in December, according to CAR. The
median price statewide of $249,960 is “still 17.2 percent ahead of the trough
in this cycle,” says Leslie Appleton-Young, CAR chief economist. “However, the
expiration of the federal tax credit for home buyers and the impact of the
Federal Reserve’s withdrawal from the mortgage market continue to be the wild
cards as we move through the year.”
February Home Prices Rise 5% Nationally
Home prices nationally are up 5.0 percent compared to
February 2009, according to a report released by Clear Capital. The
quarter-over-quarter price change through last month was flat at 0.0 percent,
indicating a softening during the winter months. But Clear Capital noted that
the year-over-year price variations have been in positive territory for two
months straight and the company said it expects another big price boost to come
when home sales pick up before the contract deadline for the homebuyer tax
credit. All four U.S.
regions posted consistent quarter price changes in February with only the
Northeast showing a decline of 1.4 percent, according to the analysis. On a
year-over-year basis, just the West had a drop, and it was only 0.5 percent.
Prices in the Midwest skyrocketed 13.8 percent
compared to February 2009.
Clear Capital says while the risk of additional REO
(bank-owned) inventories arriving later in 2010 should not be taken lightly,
the company expects this inflow will arrive with a stronger springtime and
summer buying season, helping to ease the shock to the marketplace.
