Homes are selling fast in my area. How about yours?
Looking out my window, it seems like the real estate crisis is over. But I know my view isn't the only one.
A house around the corner from mine in the Washington, D.C., suburbs went on the market at what I thought was a way too high price -- $100,000 more than a similar house sold for last year.
Darned if the new listing didn’t sell within a week.
And that wasn’t a one-off. All the Realtors I know are crazy-busy for the first time in two years.
What’s happening in my neighborhood is going on in some, but certainly not all, local markets, says Sam Khater, senior economist for CoreLogic, a Santa Ana, Calif., real estate data analytics firm that tracks repeat sales of the same homes over time.
He says D.C. home prices were up 0.2% in February, and 20 states saw home price increases compared to this time last year.
"We’ve seen slow improvement in home prices," he says. "The price decreases have gotten smaller over time. I’d expect we’re going to see a little more price decline in the fall and maybe the very early part of next winter, but we’re not far from the bottom."
Bank-owned homes typically sell for about a third less than homes sold by homeowners, so they have a big influence on local home prices.
"When less foreclosures come on the market, that’s less downward pressure on home prices," Khater says. "When foreclosure levels are stable, then prices won’t change that much."
Lender Processing Services Inc., a Jacksonville, Fla., firm that helps lenders service mortgages, says new foreclosures were stable and repeat foreclosures dropped 8% between January and February.
But the experts who predict how many foreclosures are ahead see many more on the horizon.
When they count the seriously delinquent homeowners and the foreclosed homes lenders have taken back but not yet put up for sale, they come up with different estimates for what’s called "shadow inventory."
"The shadow inventory remains persistent, even though many other metrics of the housing market show signs of improvement," says Anand Nallathambi, president and CEO of CoreLogic.
And neighborhood activists working in central cities believe banks, which had considerably slowed their foreclosure activity in 2011, will begin to send a wave of new foreclosed homes onto the market following the $26 billion mortgage settlement, which freed big lenders from some of their past mortgage misdeeds.
Such a market flood will cause home prices to fall further.
But real estate is a local game, so where you live matters.
Florida, California and Illinois account for more than a third of the shadow inventory.
The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory, CoreLogic data show.
Foreclosures also hit poor neighborhoods harder than wealthy ones. Foreclosure shadow inventory is concentrated in the $100,000 and $125,000 home market. For loans with balances of $75,000 or less, the shadow is still growing and is up 3% from a year ago, CoreLogic says.
The take-home message may be that if you, like me, live in a mid-century modest home in an area where the job market is reasonably robust, the worst might be behind you.
If you’re in a low-income neighborhood in a state where the court system is constipated by foreclosure cases and the job market is still depressed, it ain’t over yet.