US market en route to recovery
An increase in residential sales in 49 states in the US is an encouraging sign amid hopes that the property market is gaining ground in its recovery.
The sales increase in the final three months of 2010 was significant, up 15.4% for existing homes and condos, the latest research from the National Realtors Association shows.
There is still some way to go though, as sales were still down 19.5% compared to the fourth quarter of 2009 when home buying activity was spurred by the first time home buyer tax credit.
Distressed property sales accounted for 34% of all existing home sales in the fourth quarter. But NAR chief economist Lawrence Yun said the sales data is encouraging and points to signs of a recovery in the market.
‘Even with the foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down. A recovery to normalcy requires steady trimming of the inventories,’ said Yun.
He added that an improving housing market would undoubtedly influence growth in the job market.
NAR reported the national median home sale price for the last quarter at $170,600, up 0.2% from the same period a year prior. Prices rose in more than half of the 152 MSAs tracked by the data firm, while prices dropped in 71 MSAs and prices stayed flat in three.
Elmira, New York saw the biggest sales gain, up 16.5% over the fourth quarter 2009 while Cumberland, Maryland, saw the biggest price depreciation, down 20.2% to $87,700.
NAR has been in discussions with major lenders and regulators, pressuring them to loosen rigid underwriting standards that have contributed to the fall in new mortgages during 2010.
The big four banks, Wells Fargo, Bank of America JPMorgan Chase and Citigroup, lent 12% less last year than in 2009.
Walter Molony, a spokesman for NAR, the largest trade group of real estate agents in the country, said it is not a lack of demand. Instead, the banks under pressure from regulators, lawmakers and the recent collapse of loosely written mortgages, have tightened standards too tight.
Yun said once the banks improve their balance sheets and shrug off the weight of those legacy assets, banks could begin easing credit restrictions. But, he said, it is happening at a very slow pace. ‘If banks were to return to normal, sound underwriting standards, home sales could rise 15%,’ Yun said.
The latest figures also show that the number of foreclosures is falling, down 17% in January from a year ago, according to RealtyTrac. In 2010, foreclosures reached record high, but RealtyTrac forecasted this year’s filings to be even higher once the reviews are completed. January marked the third straight month of fewer than 300,000 properties receiving a filing, following 20 straight months of higher numbers.
‘Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing,’ said RealtyTrac chief executive officer James Saccacio.
Lenders repossessed 78,133 properties in January, down 11% from a year ago, but up 12% from the previous month, a sign that operations are ramping up again. The 23 states that force lenders to foreclosures through the judicial process had repossessions drop 16% from a year ago, compared to just a 9% drop in non-judicial states.
One in 93 properties received a foreclosure filing in Nevada, the highest foreclosure rate in the country for more than two years. Repossessions there increased 16% from the previous month.
In Arizona, one in 175 properties received a filing for the second highest rate, followed by California, where one in 200 properties received a filing.