Market Studies

The Consumer Distress Index, published by CredAbility, found the average U.S. household is under less financial stress these days, most likely due to factors such as added jobs and the mild winter weather this year. Overall, U.S. households scored 69.9 out of 100 points, with a score under 70 indicating a state of financial distress. While still 0.1 points shy of rising above the distress category, the score is an improvement from the previous quarter's 67.6. Also, 69.9 is the highest score since the 2008 third quarter and the 2.3 point increase from the previous quarter is the highest quarterly jump in seven years.

The housing recovery will come in two phases. First, home prices will rise by just under 1 percent in the second half of 2012. In 2013, prices will rise by 1.5 percent, then go up another 2.5 percent in 2014. For the second phase, home prices will increase 3 to 3.5 percent between 2015 and 2017. These are the predictions from a report released by the Demand Institute, which is jointly operated by The Conference Board and Nielsen. The report, titled The Shifting Nature of U.S. Housing Demand, stated investors who buy rental properties will lead phase one of the recovery, as opposed to buyers who purchase properties as their own residence.

Nationwide, the number of homes listed for sale has fallen 21 percent from a year ago, according to Pro Teck Valuation Services' May Home Value Forecast. Also, the forecast reported Months of Remaining Inventory (MRI) is at 6.3 months, which is the lowest level since 2006. A strong market will have 0 to 5 months of inventory, a balanced market 6 to 10 months, and a soft market will have 11 to 15 months. From 2002 to 2005, when the housing market was booming, the national MRI was at or below 5 months.

Builder confidence jumped five points in in May to 29, its highest level since May 2007, the National Association of Home Builders reported Tuesday. Economists had expected the index to edge up to 26 in May. The month-month increase was the largest since April 2009. The total index in May was up 13 points from May 2011, the strongest year-over-year gain since April 2004. All three components of the index - current sales, sales six months out, and buyer traffic - showed strong increases in May, with buyer traffic and current sales conditions each rising five points while the projection of sales six months ahead increased three points.

For the first time since 2002, the National Association of Realtors (NAR) reported that income for its members increased in 2011. The median income of a member rose 2.3 percent to $34,900 in 2011. Members who are licensed as brokers typically earned $48,400 in 2011, while the median for sales agents was $27,200. For NAR members who have 16 or more years of experience, income earned was $50,200. Members working 60 hours a week or more earned $80,900, and 17 percent of all members had a six-figure income.

According to a report from Foreclosure-Response.org, the serious delinquency rate, which includes loans 90 or more days past due plus foreclosures, increased for the first time after a downward trend between December 2009 and June 2011. Serious delinquencies rose from 9.2 percent in June 2011 to 9.7 percent in December 2011 for the nation's 100 largest metropolitan areas. While the 90-plus delinquencies component of the percentage was flat at 3.8 percent and has remained largely unchanged for the past four quarters, foreclosure rates continue to rise, and now stand at 5.9 percent. In June 2011, the foreclosure rate was 5.5 percent.

Out of seven different categories of fraud reported by depository institutions, mortgage loan fraud (MLF) saw the second great increase from 2010 to 2011 and had the highest number of suspicious activity report (SAR) filings, according to a report from the Financial Crimes Enforcement Network. MLF SARs increased nearly 31 percent to 92,028 in 2011 compared to 70,472 in 2010. Consumer loan fraud saw an even greater increasing, spiking 127 percent after reaching 32,285 filings in 2011 compared to 14,194 SARs in 2010.

It will take 46 months to clear the market's supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor's Rating Services based on first-quarter 2012 data. While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets. Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures. S&P says its months-to-clear estimate in judicial states is almost 2.5x as long as non-judicial states.

As one of the hardest hit states during the real estate downturn, Florida often pops up in market reports as having a noticeably higher foreclosure rate than other states. Even so, the state is also becoming recognized for how quickly some of its markets are climbing out of the housing slump. For example, the National Association of Realtors recently cited data from Move Inc. showing the top 10 turnaround markets. Seven out of 10 were in Florida. Yet, a recent report from Florida Realtors stated that while Florida is in a revival period, distressed properties will remain a big factor for the next 10 years.

Interest rates continue to slide further down alongside the decline in home prices. In addition to these factors improving affordability for homeowners, the National Association of Realtors (NAR) found the amount of income needed to qualify for a mortgage is actually well below the median income in most parts of the U.S. The national median family income was $61,000 in the first quarter. If a buyer wanted to purchase a home at the national median price, he or she would need an annual income of $34,700 if making a 5 percent downpayment. A 20 percent downpayment requires about $29,300.