Some market watchers say housing has bottomed in Orange County. Great, but when’s the recovery?
To begin addressing that question, let’s look at the downturn and recovery of the ’90s. The chart below (it gets larger with each click) shows monthly totals of foreclosures and median sales prices from the peak of the last cycle; in July 1994 the median was $220,000 and banks seized 91 houses and condos. Source: MDA DataQuick.
From the peak, it took 44 months (3.7 years) to hit bottom in pricing. But the crest in foreclosures came later, 64 months (5.3 years) after the pricing peak/downturn beginning. Then the recovery in prices began 71 months (5.9 years) from the pricing peak/downturn beginning.
Note foreclosures topped first and then seven months later prices started a clear upward trend. The foreclosure inventory spent several months clearing before prices were free to increase.
Now compare that to the current cycle. Take a look at the chart from the pricing peak of $645,000 in June 2007 — there were 311 foreclosures that month.
From the peak, it took just 20 months (1.7 years) to hit bottom in pricing — $370,000 in January 2009. That’s less than half the time it took in the last cycle.
As for foreclosures, they climaxed in just 15 months from the pricing peak/downturn beginning, hitting 1,441 houses and condos seized in August 2008. That’s a fraction of the time it took in the last cycle.
If August 2008 was a true high point for foreclosures, then prices could recover any moment. However, state and federal programs have delayed foreclosures, and prevented some, and that makes a comparison with the ’90s more difficult.
This is why the rise in delinquencies is so troubling. Once again here’s my last chart from First American CoreLogic:
The chart, which has data up to June 2009, shows that while banks are holding fewer foreclosures on their books (REOs), the ratio of mortgages with some type of foreclosure filing and the ratio of mortgages 90 days late have been steadily increasing.
As banks and servicers demonstrate how few people qualify for the Obama mortgage relief plan I expect to see foreclosures headed up in coming months. That means it’s still too early to predict a housing recovery, and it’s debatable if January’s bottom in pricing will hold.
More from this blog…
- Banking group urges break-up of Fannie, Freddie
- Fed should buy mortgage securities into 2010
- BofA seeks to repay some U.S. aid
- Banks are slow to foreclose but it’s not a conspiracy
- FDIC exposed to losses on $80 billion in loans
- Record 8,000 mortgages face foreclosure
- Buyer of failed IndyMac defends loan-aid efforts
- Reader debates paying mortgage after down payment evaporates
- These O.C. homes are about to be foreclosed
- Fed says disclosing emergency loans will hurt banks
Post from: Mortgage Insider
More state and national mortgage news and mortgage press releases:
- NAHB delvers testimony on Hill: Appraisal and AD&C problems hampering housing recovery The National Association of Home Builders (NAHB) told Congress...
- HUD announces $100 million in Recovery Act grants for public housing U.S. Department of Housing and Urban Development (HUD) Secretary Shaun...
- HUD awards over $1 billion in Recovery Act funds to jump-start affordable housing construction sites in 26 states U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan has...
- NC Commissioner of Banks proposes rules to curb foreclosure The North Carolina Office of the Commissioner of Banks...
- NLIHC report: Housing market stabilizing Housing markets in many metropolitan areas appear to be...
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