The end of the housing correction is looking closer, as the job market finally turns the corner, investors step up home purchases, and the Obama administration revamps its foreclosure mitigation efforts, according to Moody's Investors Service
""These forces lift our outlook for house prices slightly,"" the credit ratings and research agency said in its _ResiLandscape_ report issued this week.
Moody's noted that in March the job market turned in its best performance in three years, with payroll employment increasing by 162,000. While the market is still very much in transition, Moody's says the March numbers mean ""it is safe to say that the worst is overÃ¢â‚¬Â¦and sets the stage for stronger gains to come.
""Jobs are key to the housing outlook, with job creation supporting demand for home purchases, as well as helping homeowners stay current on their mortgage loans,"" the agency said.
According to Moody's report, investors are also boosting demand as they actively seek home purchases in many of the most distressed housing markets.
""There is a growing sense that while there may be further price declines to come, the market is near bottom and investors with a buy and hold strategy are moving in,"" the report said.
Anecdotal evidence suggests that bargain basement prices on distressed homes have brought in large numbers of investors and previously slack markets are tightening up, Moody's said, citing data from the California Realtors Association that shows the months of supply of available homes for sale is averaging around five, compared to seven a year ago and 15 at the market's peak in 2007.
Based on credit file data from Equifax, close to 4.5 million first mortgage loans are currently in the foreclosure process or at least 90 days delinquent and quickly headed toward default.
""On this front, the spring is also bringing in good news,"" Moody's said. ""The Obama administration is revamping its foreclosure mitigation efforts, which to date have fallen well short of expectations. The changes are wide-ranging and could help end the foreclosure crisis earlier than anticipated.""
The administration's new initiatives under the Home Affordable Modification Program (HAMP) to help the underwater and unemployed are expected to help bring down the number of foreclosures by addressing the two main causes of delinquency in today's market.
Moody's says without what it calls HAMP 2.0, the agency was expecting some 2.25 million homeowners to lose their homes this year in foreclosures or short sales.
""We expect the new program to keep some 350,000 of these homes from being lost,"" Moody's said. ""The foreclosure problem will remain serious, but fewer homes will be lost to a distress sale this year than last year. Further, the mix of sales will shift to a higher share of short sales, which typically result in a higher sale price than a foreclosure sale.""
Regarding the principal write-down piece of the program revisions, Moody's said, ""The servicers we surveyed view the principal forgiveness program positively and are willing to implement it as allowed by transaction documents. The biggest challenge that they cited, however, is a lack of sufficient process detail that is required for implementation and is not likely forthcoming until mid- to late-2010.""