“Economist Feels Housing Won’t Lead Recovery”
I am so delighted that economist after economist are seeing the big picture. They see the big picture when it comes to real estate, NOT!
As all of you already know, real estate is a local business. There are markets across the country that are seeing growth. There are markets that are starting to see a leveling of real estate values and in some limited cases even some appreciation. We are seeing more multiple bid situations.
Here is a concern that I have and I am seeing this happening more and more. The appraisal world is not catching up with values. Three times this week, appraisals on purchases have come in below the contract price. Two of the transactions were able to successfully renegotiate, but the other not so much.
In the one transaction that isn’t coming together the buyer still willing to buy at the agreed price. The Realtors on both side of the transaction have put comps together that justify the value. The appraisal to sales price difference is $18,000. When the appraiser received the additional comparables, he said, I’m not changing my value. Even the lender’s appraisal underwriting manager said there should be an adjustment. We have asked for another appraisal to be done, but so far the jury is still out.
Economist do not understand local markets and say a lot of stuff that, well just isn’t so.
Housing Still Not Aiding in U.S. Recovery
By: Austin Kilgore
The U.S. economy is poised for moderate growth in 2012, but unlike prior recessions, the housing sector won’t lead the recovery, according to Mark Fleming, chief economist for CoreLogic.
“We're experiencing a high degree of abstinence in the market, but I think this is the year we're finally going to see something happen,” Fleming said during a presentation that kicked off SourceMedia’s Mortgage Servicing Conference, ongoing this week in Dallas.
In 2011, moderate growth was tempered by the natural disasters in Japan, the foreign debt crisis, and the U.S. federal budget debacle. “As long as those things don't happen again this year, we should see some improvement in the economy this year,” Fleming said.
According to Fleming, the serious delinquency rate of mortgage borrowers is declining and overall mortgage distress is tempering. He expects to see an ever growing decline in the inbound flow of delinquencies.
“If you're a subprime loan originated in 2005 that's still out there, you'll probably keep paying,” Fleming said.
Still, real estate owned and short sales account for 27% of all home sales. While short sales produce a higher return for investors over REO sales, they’re still not the dominant form of distressed asset sale.
In addition, foreclosure backlogs are still significant in judicial states, where the process is taking longer to complete. With the exception of Florida, Fleming said that foreclosure pipelines are diminishing in the “sand states” where rates have been the highest during the downturn. Now, foreclosure pipelines are highest in the Southeast and Northeast portions of the U.S.
Fleming said there’s currently an eight-month supply of homes for sale on the market, but the rental market is at a six-month supply. Rental rates are increasing, which makes REO rental programs more appealing. (For complete coverage of SourceMedia’s servicing show see the Monday paper edition of National Mortgage News.)
Joe Petrowsky, NMLS #6869
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