Is the housing market getting better? Are foreclosures going down? Well, it depends on how you want to look at the numbers.
In California, foreclosures were at 31.9% in May, which was down from the 35% rate in April, better but not quite over the hump. In Green Bay, WI, the June foreclosure rate was up 27% from the same period last year, but was slightly down from April. In Phoenix, AZ, the foreclosure rate in May was 30%, which was lower than its high of 51% in February, better than the 40% foreclosure rate in May of 2008, and slightly lower than April once again.
Many would, and have, looked at those numbers and said that the housing market has to be getting better because the numbers are coming down. However, if the rates were so high, don’t the numbers have to come down because, think about it, who’s left to have their houses taken away from them?
Not only that, but the government had a hand in halting the foreclosure rate temporarily while the United States was literally in a financial panic, but those days are gone. Many banks put off foreclosing on a lot of homes because they had signed onto the home-stability plan of the Obama Administration, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments. But that’s ending, and banks are likely to start another round of house grabbing to make up for lost time.
Home sales have started to creep up, but that’s because there are so many foreclosed houses on the market that people can get great deals right now. Even in Manhattan, which has very few actual houses but plenty of condominiums, the price of condos dropped from around $950,000 to around $725,000, which is unheard of for that area. In Florida, people are able to upgrade to homes that used to be worth over a million dollars for around $450,000. And in Detroit, in more depressed areas, some banks are actually encouraging new buyers by allowing them to purchase homes for $100, then giving them loans to fix up those homes, which helps improve their worth and the worth of other homes in those neighborhoods that banks are hoping someone takes.
In some areas, home starts have started looking up a bit, but they’re also being halted as both Freddie Mac and Fannie Mae have hired assessors unfamiliar with many areas to determine the worth of homes, and what they’re coming up with is far lower than the rates that cities and towns have assessed the same property. This has only been since May 1st, after a settlement with New York state Attorney General Andrew Cuomo, and of course they got it wrong. This has prompted two congressman from states where the housing market is distressed to try to put a moratorium on the plan; it needs to be totally scrapped.
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