Housing Market Update
Even though March saw a slight increase in foreclosures, the downward foreclosure trend is still expected to dominate this year’s real estate market. Statistics nationwide show that foreclosures have decreased 52-percent since their peak in 2010. In fact, nationwide the U.S. saw 55,000 foreclosures in March 2013 and 52,000 in February, down from an all time high of 66,000 in March 2012. Since the foreclosure crisis slammed the U.S. in fall of 2008, when many borrowers’ adjustable rate mortgages became due, the real estate market has been engrossed with almost 4.2 million foreclosures.
The states that have the highest foreclosure rates include Michigan, Florida and California, as their markets were hit the hardest. Current inventory shows foreclosures at 1.1 million nationwide, down 23-percent from nearly a year ago. This number is expected to continually decline. While the foreclosure inventory is 2.8-percent, March saw a 17-month consecutive decline in the number of foreclosures.
Why the decrease in foreclosures and short sales? Many experts are citing government intervention. While the government and banking industries promote foreclosure alternatives, including loan modifications, second-lien extinguishments, debt relief options and short sales, this has helped reduce the overall number of foreclosures. However, there are still a number of homeowners that simply haven’t reached the foreclosure process, but are attempting to work with banks, seeking financial relief.
Homebuyers are feeling the lingering pain of minimal inventory. The U.S. Department of Housing and Urban Development recently announced it would be releasing HUD-owned homes, causing experts to predict that the HUD market will increase over the next two years. Lenders are still pouring through major backlogs of foreclosures and foreclosure reviews, meaning that HUD homes will be a welcome relief to a market with minimal inventory.
While the market’s inventory is there, it’s simply held up by bureaucratic measures, which leads some to conclude that the latest housing numbers are not 100-percent accurate. HUD loans are guaranteed and backed by the federal government. This means that if the homeowner defaults on his/her HUD loan, the government will pay off the mortgage in full, gain ownership via the deed and re-sell the property. While this process can be quite lengthy – taking several months, if years – this contributes to a large backup of HUD homes in inventory.
While HUD homes may offer appealing inexpensive prices, they are often in poor condition. Many of these homes do not qualify for a traditional loan, meaning that initial financing must be completed by a hard money lender. These lenders, such as My Hard Money Lenders, loan money to make necessary housing repairs, allowing the home to then be refinanced based on conventional requirements. My Hard Money Lenders works with direct lenders that offer fast money lending and bridge loans.