Weekly State of Market

We’re almost to the end of October, and with a little over two months left in 2013, the foreclosure market across the country is shaping up and sorting itself out.

Here is a look at what is happening with foreclosures in various markets from across the U.S.

California Foreclosures Lowest in Seven Years

California has been hit as hard as any state by the foreclosure crisis, but at this moment in time, the state has recovered nicely – to the tune of having the fewest foreclosures this year since 2006.

According to recent statistics, California’s third quarter foreclosure level fell by 59% from the third quarter of 2012 and is at the lowest level – 20,300 notices of default – since the first quarter of 2006.

Half of Foreclosed Homes Still Occupied

Even after the bank repossesses a home in foreclosure, eviction can take months or even years. RealtyTrac estimates that 47% of foreclosed homes are still occupied by the owners. In some of the hotter markets like Miami and Los Angeles, the percentage is more like 60%. Not all are owners, as renters are occupying many of these homes.

Real Estate Attorney Advises LLC

Protecting your assets from lawsuits, maybe by a tenant hurt in a property, is a prudent approach in business. One real estate attorney advises that an LLC, Limited Liability Company is a better approach than an S Corporation. LLCs are easier to maintain than S Corps. Be careful to investigate whether you’ll have tax problems in transferring properties into an LLC.

The market is turning and in many towns it is turning fast and furious. This makes these towns a great place for investments.

Paul Hagey wrote an article for InmanNews.com addressing these markets & the changes.

With median list prices up 44.3 percent in the third quarter from a year ago and inventory down 24.5 percent over the same period, Detroit, despite filing for bankruptcy in July, experienced the most significant housing recovery from July to September, according to realtor.com’s third-quarter “Turnaround Towns” report.

Banks Giving Timely Mortgage Relief

It appears that the $25 billion mortgage relief settlement is running ahead of schedule. This is according to the monitor of the program. While the program is moving along, the number of households helped by the settlement has fallen short of predictions. The settlement includes a combination of mortgage relief and short sales.

Shiller Says Some Markets “Bubbly”

Robert Shiller is seeing “bubbles” developing in some markets around the country, and he is predicting more in the near future. He defines a bubble as: “A tendency to view housing as an investment is a defining characteristic of a housing bubble.”

Robert Shiller, recent winner of a Nobel Prize in Economics, points out that the view that all markets are efficient simply is not the case with housing. With the government massively subsidizing housing for the “regular buyer,” the expectation is that many of these regular wage-earning middle income people will buy homes and the economy will prosper. However, the result has been the opposite, with big banks and major institutional and investment buyers scooping up millions of homes as rental investments.

If you were to create a list of the top five states hit hardest by the real estate market collapse, California would be on that list.

But according to a survey of California-based Realtors, there are a lot of positive trends going on in the Golden State that provide a case study for real estate at the national level.

Positive Equity Sales Spike Dramatically

One big development in 2013: the percentage of homes with positive equity – meaning, the difference between the home’s fair market value and the remaining balance on the loan is positive – rose significantly.

The morning of October 1st came without the passage of a new budget proposal for the government. Given that Americans have not seen a shutdown of the government in nearly eighteen years, many are wondering what to expect during this time for real estate – especially considering that 90% of all home loans in the United States are either insured, underwritten or outright owned by the federal government and the agencies and entities associated with it.

Do you guys think the market will continue to recover with the recent government shut down?

Hello Everyone,

A couple of articles this week over at NuWire.com question the ability of the housing market to continue price improvement in the short term. Three constraints on further improvement are in play right now:

1. Rising prices reducing housing affordability for consumers.
2. Interest rates are spiking.
3. Household incomes are showing signs of stress.

Both articles make it clear that investor buying has been the driving force behind price appreciation over the past year or so. Investors are still involved, even competing for shrinking inventory in some markets. Much of the mainstream media is not addressing the price improvement accurately, under-valuing the contribution of investors.