What does the latest round of real estate data and statistics reveal about the market, what’s ahead, and what are the best moves available for you to make?
Risk of Mortgage Fraud Declines
Overall risk fell, according to the Mortgage Fraud Report. However, there were still almost 13,000 mortgage applications containing fraud or serious misrepresentations in the second quarter of 2015 alone, bringing the total up to about $17.3 billion for the 12 preceding months. Louisiana saw the largest year over year growth in fraud, with an almost 20 percent rise. Undisclosed mortgage debt and occupancy fraud on properties which get converted to rentals remain among the most common types of mortgage fraud. So lenders and law enforcement are getting better at catching fraudsters, but there is still a need to be alert.
Foreclosure Inventory Falling, But Plentiful
There were 36,000 completed foreclosures in August. There have been around eight million homes lost to foreclosure since 2004. That doesn’t include all of those that distressed homeowners shed through other means, or which are still in limbo. At the end of the summer there were still over 600,000 US homes available in foreclosure inventory. Over 500,000 foreclosures have been completed since last year. However, CoreLogic reports serious delinquencies, completed foreclosures, and foreclosure inventory all down by over 20 percent. Contrary to some media, the real estate data suggests that there is still quite a ways to go in this recovery period before we get back to par. However, there is also plentiful inventory for homeowners and real estate investors looking to buy.
U.S. Homes Prices Rising
The CoreLogic Home Price Index shows US home prices up by 6.9% year over year to August 2015. This robust growth is expected to subside by around 30% next year due to tight inventory levels. However, there appears to be no shortage of demand, especially with historically high rents which could push far more renters to become buyers out of necessity.
Surging Home Equity
Almost 800,000 US homes regained equity in the second quarter of 2015. After the summer rush and as end of year sales pick up even more US homes should have equity as we move into 2016. If price increase forecasts are correct another 800,000 homeowners could be back in positive equity situations by summer 2016. 91% of mortgaged properties, or around 46 million housing units are expected to have positive equity today. In addition to new construction, housing units regaining equity could fuel more home sales, and even more robust price gains than analysts are projecting.
New Wave of Home Buyers
Newly available home inventory will be met with a massive wave of over 7 million boomerang buyers, of which hundreds of thousands are already becoming eligible for new mortgages in 2015 according to TransUnion. With more low down payment mortgage offerings which classify these borrowers as first time home buyers many could get into homes swiftly and on great terms. With mortgage fraud risk declining and delinquencies falling mortgage lenders could relax underwriting standards and qualifications even further in 2016. The Dodd Frank Act remains the one major hurdle for buyers, sellers, and lenders.
The current U.S. real estate market continues to deliver great gains for property owners. Current growth could well be extended as new inventory comes online, and demand for purchases surges on improved credit, more aggressive lending practices, and more buyers enter the market. While inventory may appear tight in some areas, there is a substantial amount of distressed and foreclosure inventory awaiting bargain hunters and real estate investors that know where to look. Distressed property data also suggests an extended upward phase for the U.S. housing market as legacy inventory gradually gets absorbed before more aggressive growth likely kicks in after the 2016 presidential election. It appears hard to go wrong as a buyer today. And sellers finally back in the green may find the next nine months to be the optimal time to trade up.