Earlier in the week I posted a slide that showed what a group of experts believe is going to happen to home prices each year over the next five years. In case you missed it, here’s the graph:
As you can see, expectations for 2013 show a 6.7% increase in the prices of homes and 2014 is at 4.2%. After that, the percentages go down into the 3’s for the remaining three years. So why is it that 2013 and 2014 are higher than the latter three years?
One reason is that distressed property numbers are going down. Distressed properties include foreclosures, short sales and real-estate-owned (REO). Take a look at this:
In the upper-left quadrant, we can see that so far in 2013, inventories of distressed properties have fallen 14.4%. That means that there are fewer distressed properties on the market now.
The upper-right quadrant shows that completed foreclosures are down 20% from 2012. Fewer people are actually completing the foreclosure process.
The lower-left quadrant shows that inventory of foreclosure properties is down 28% from last year. There are fewer foreclosure properties on the market this year.
And finally, the last quadrant shows that seriously delinquent loans (90 days or more) have gone down 23.7% from 2012. Fewer people are late on their payments.
These numbers are good because they are showing that things are still improving. Fewer people than last year are struggling in terms of their homes. The effects of the burst bubble continue to wane.
While we are discussing distressed properties, let’s take a moment to look at the foreclosure inventory across the nation. Some people may live in a state where they hear that there are a lot of foreclosures. This may worry them in terms of how their market is doing. Certainly there are states that are worse than others, but there are explanations for some.
Looking at the map, the darker the colors get, the higher the number of foreclosures are for that state. So you can see that the Northeast looks like it’s struggling. However, the reason for the higher numbers in this area is that they have a judicial process that requires court proceedings for foreclosures. This slows things down quite a bit. So, experts believe that a year from now, the Northeast will look a lot better as the legal proceedings are worked through.
Nevada’s numbers are high. However, this can be partially explained by a new restrictive law that was passed about 18 months ago that dictates how people can be foreclosed on. They are in the process of changing the law, and it is believed that when they do, the numbers will go down. Finally, Florida definitely is having a challenge, but experts agree that Florida knows how to work through the challenges and that ultimately they will be okay.
All of today’s information will come into play tomorrow when we discuss the fear that some have that a new housing bubble is forming. Until then, enjoy your day!