It will take nearly four years to clear the shadow inventory of foreclosed (or nearly foreclosed) homes given the number that are delinquent, recently caught up, or bank-owned.  This can not be good news for a full housing recovery, but at least it’s a start.  From DS News.com,

To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.

The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.

The good news is the rate in which shadow inventory is occurring has slowed.

The feeling in the real estate industry is that the housing market is in recovery.  From web pages to newspapers, real estate agents and experts are heralding the fact that home sales are on the upswing.  Good news for sellers, agents, lenders, everyone!

The National Association of Realtors says,

Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering. 

“The housing market has clearly turned the corner.  Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses,” said Lawrence Yun, NAR’s chief economist.

While other are predicting the second foreclosure wave, we will cling to the notion of a recovery until proven differently!

There is a new kind of investor on the block – one that is stepping in to help homeowners in trouble with their mortgage. They want people who purchased their homes seven’ish years ago and have some equity built in.  They are there to take it off the homeowners hand and will in turn lease it to someone else until the housing market return.  From Jeff Pearl, a RE/MAX agent in Leesburg, Virginia,

They claim that there is no need for owner to worry about the ” Due on Sale” clause which is usually in mortgage docs. And in some cases they claim they will pay the owner $5000.00 to help them move out of the property. Oh, and their sales pitch to real estate agents is that they will let the agents that find them properties list the properties for sale 3-5 years down the road when they’re ready to sell.  I see many risks for both investors and owners. I think any owner that is approached with this should consult with an attorney…

Seeking legal advice is an outstanding suggestion, sir. Especially given the desperate state the homeowners must be in to prevent them from making a rash decision they’ll regret later.

Mortgage rates are on the rise, according to Zillow.com.  Last week rates quoted came in at 3.74 percent and this week they rose to 3.97 percent.

This signifies the highest rate recorded on Zillow Mortgage Marketplace in the last five months. The 30-year fixed mortgage rate steadily rose for the majority of the week, dropping to 3.9 percent on Monday. The rate briefly reached 4 percent late Monday night before falling to the current rate early this morning.

The increase in the mortgage rate could be a positive indicator of a stabilizing market, especially as spring and summer approaches – the busy season for real estate.

Have you seen there’s a new house hunting show coming to television this spring? I may have to tune in to see exactly how much fame and fortune can buy for someone!

We have been very optimistic on this site before when it comes to the housing recovery.  Each time we have been disappointed!  However an article from DS News reports that with banks loosening credit standards, the housing crisis could end in 2012.  From DS News,

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”  In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

This is good news and action that we hope sticks around for a while. Meanwhile home prices continue to drop according to the latest statistics from Case-Shiller.

Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent, holding constant with the annual declines reported for October of -3.2 percent for the 10-city composite and -3.4 percent for the 20-city measurement.

Eighteen cities’ annual returns were in negative territory in November. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent, Atlanta continued to post the lowest annual results.

Realtors from around the country are reporting there is life in the housing market. That’s some good news!

From Pittsburgh to San Jose, several cities across the country are poised for a solid real estate recovery, according to an article in Forbes via MSNBC.com.  Strong employment numbers and a surprising surge in new home construction seem proof positive that recovery is imminent.

All of the cities that made our list share one common factor: a relatively strong job market. “For real estate to do well you want to see two things: that incomes are growing rapidly like they are in a market like San Jose … and that the growth in jobs attracts other people to that market,” says Ingo Winzer, founder and president of Local Market Monitor. However, job growth should be looked at as a bullish housing indicator only if the unemployment rate is already relatively low — that suggests local companies are creating new jobs rather than rehiring for positions they cut during the recession.

If you live in Boston, Pittsburgh, Rochester, NY, Austin, Raleigh, or New Orleans, the news may be good for sellers in 2012.

Photo by monkeyatlarge.

With 25 percent of delinquent mortgages across the nation belonging to investors, flippers played a big role in the housing implosion that began in 2006. According to MSNBC.com, purchases by people who owned other homes contributed significantly to the inflating housing bubble – ramping up prices across the nation.

By that same inflation of prices, values dropped just as precipitously when the bubble burst.

Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida, and Nevada from 2007 to 2009.

As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed as people couldn’t or refused to pay their underwater mortgages. Residential construction also languished, putting hundreds of construction workers in the hardest-hit states out of work.

Cash buyers are best positioned today to step in and save the housing market.

When my husband and I bought our first house, we had to come up with about $8,000 for a down-payment and our interest rate – with great credit – was 8 percent.  We went from renting a duplex for $325 per month to a house payment of about $750 every month.

At today’s rates, the house payment would be about $510 per month (and that includes insurance and taxes)!  Florida agent Marco Giancola also recalls the days of high interest rates when he bought his first home,

It all hit me about a month later as I wrote the check for the first mortgage payment and discovered the interest rate was 18%. This memory popped into my head as I read that Freddie Mac announced on Thursday that the mortgage rates ticked up to 4 percent from 3.99 percent on a 30 year loan. Six weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research.

If you can qualify for a home loan, have good job security, a good down payment (and we’ve said this before here at the Shak), NOW is the time to buy!

While I do not believe my family is underwater in the value of our home, after almost nine years of living here, we are only at the “break even” point.  That is absent any real estate agent fees that would be paid if we chose to sell.  That is if there is no further job loss.  That is barring any major medical problem and falling behind on payments.

According to MSNBC.com, 29 percent of all homes are now underwater.

Homes with underwater status are often considered risks for future foreclosure, since owners could have trouble refinancing or selling and may opt for a foreclosure via “strategic default” if they feel they will never regain their lost equity.

[Stan] Humphries estimates that home values will bottom out in 2012 at the earliest and said the foreclosure market will remain “robust” for the next two to four years.

There are a lot of unknowns in this  never-before-seen housing market, but it will eventually return to normal.

However, in the informal world of the feel of everyday man on the street, there actually has been a peep of consumer confidence by some long-time businessmen in my community. There is now talk of developing a small shopping area behind one of our local grocery stores.