Today, Orange County based CoreLogic released a report on foreclosures which implicitly is a gauge on the housing market, since foreclosures ultimately place pressure on competing homes on the market as well as pressure on values of appraisals, thus impacting the sales of homes and the refinancing of homes. The CoreLogic report indicated that during the 58,000 foreclosures occurred nationwide in June, 2012 as opposed to 62,000 foreclosures this time last year. So what does this mean?
For one, the report suggests a slow-down in foreclosures. However, we must note that the foreclosure process often takes many, many months. So while June may have been a month with a lower volume of foreclosures, the build-up in lender and servicer pipelines may be swelling and ready for an avalanche in the months to follow.
But let’s take this report for face value and tease out the message that the pace of foreclosures is indeed slowing down.
The next logical thing to do would be to look at the foreclosure inventory, which accounts for all homes at any given point in the foreclosure process (what I referenced to a few sentences ago). The foreclosure inventory was unchanged June 2012 versus June 2011, at a whopping 1.3 million homes nationwide. This number is nearly 3.5% of all homes in the nation with a mortgage.
Within this report, CoreLogic also noted that the top states with a heavy concentration of foreclosures are: California, Michigan, Florida, Texas, and Georgia. These states alone accounted for nearly 50% of all foreclosures in the 12 months ending July.
A few indicators can be derived from this report. For one, the nation’s housing woes are still in the process of being worked out. Home prices may continue to slide or, at best, experience sideways movement in most places. In certain parts of the US, where economic conditions have stabilized or improved, home prices may begin to inch up due to limited supply and pent up demand. This function of economics is what is driving home price appreciation in places such as San Jose, California (with tech boom 2.0) and Manhattan, New York (financial and banking stabilization). But don’t expect a miracle rebound to happen overnight for counties across the US.
So what does this mean for you? It means, if you are a homeowner who can refinance using today’s ultra-low rates, do so. This opportunity will not last forever. Mortgage rates on a 30-year fixed are as low as 3.25%. That’s simply a really good looking rate.
If you are a renter, begin looking for a home. Home prices are down substantially from their 2000-2006 peak. Mortgage payments may be less than rent in today’s market, and for some years to come.
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