Market Studies

Last year was a good year for home bargain-hunters, according to the latest data from Radar Logic. The firm's January report revealed a 5.42 percent decline in prices from January 2011 to January 2012 and a simultaneous 7.7 percent increase in transactions. The 5.42 percent price decline over the year brought Radar Logic's composite to its lowest rate since July 2002. Radar Logic predicts prices will remain flat this year and next before increasing ""at an accelerating pace"" in 2014 and 2015.

While prices are expected to drop for the year 2012, house prices were left unchanged from December to January, according to the FHFA’s monthly House Price Index. Over a 12-month span ending in January 2012, prices fell 0.8 percent. While the drop is not dramatic, the U.S. Index shows prices are 19.2 percent below the April 2007 peak and roughly the same as the February 2004 index level. The FHFA monthly index is based on purchase prices of homes backing mortgages sold to or guaranteed by Fannie Mae or Freddie Mac.

Moving along side higher yields on bonds, mortgage rates continued to climb upwards, with the 30-year fixed-rate mortgage above the 4 percent benchmark for the first time since October 27, 2011, according Freddie Mac's Primary Mortgage Market Survey. The 30-year fixed-rate mortgage averaged 4.08 percent for the week ending March 22. Frank Nothaft, chief economist for Freddie Mac, attributed an improving assessment of the state of the economy by the Fed, better than expected results of the bank stress tests, and the likelihood of a second bailout for Greece as reasons for higher bond yields.

First time claims for unemployment insurance fell 5,000 to 348,000, a four-year low in the week ended March 17 and the second straight weekly decline, the Labor Department reported Thursday. Data for the prior week was revised upward, to 353,000 from 351,000, making the decline larger. The last time initial claims fell below 350,000 was in April 2008. Continuing claims, reported on a one-week lag, also fell, dropping 9,000 to 3,352,000 for the week ended March 10, after dropping 63,000 one week earlier. Continuing claims reflect the other part of the employment picture, hinting at hiring.

The current rate at which mortgage borrowers are falling into serious delinquency closely matches the rate of distressed sales - short sales and REO sales - according to CoreLogic's latest report released Wednesday. While distressed sales are keeping the shadow inventory from growing, the quantity on record is not yet decreasing. In fact, today's shadow inventory mirrors that recorded in January 2009, though there have been 3 million distressed sales since that date.

An alarming number of homeowners see strategic default as a viable option should their home continue to depreciate. Almost half - 47 percent - of homeowners participating in an online poll from Housing Predictor say they will walk away from their mortgage if falling home values persist. The number of borrowers open to strategic default has risen sharply since the company last surveyed public opinion on the issue. In October 2010, 36 percent of homeowners polled said they would throw in the towel should housing prices continue to drop.

The number of delinquent mortgages continued declining into February based on comparisons for both the prior month and year, according to data from Lender Processing Services (LPS). The delinquency rate, which consists of loans at least 30 or more days past due but not in foreclosure, dropped 5 percent on a month-over-month basis, and 14 percent compared to the same time last year in February. Overall, 5,846,000 properties were either 30 or more days delinquent or in foreclosure in February.

Existing-home sales fell in February from an upwardly revised January sales pace, the National Association of Realtors (NAR) reported Wednesday. February sales - completed transactions - were down 0.9 percent from January to a seasonally adjusted annual rate of 4.59 million. January's total was revised up to 4.63 million from 4.57 million. The February 2012 sales pace was up 8.8 percent from February 2011. The median price of an existing home in February was $156,600, up 0.1 percent from the previous month and up 0.3 percent from February 2011. The month-over-month price increase was the first since last June.

State and local governments across the nation responded to the foreclosure crisis by introducing a wave of new laws aimed at protecting homeowners. Unfortunately, according to Alfred M. Pollard, general counsel for the Federal Housing Finance Agency (FHFA), some of these laws are hurting more than helping as the housing market struggles toward recovery. Pollard, speaking before a House of Representatives committee this week, cited estimates that state governments have introduced 550 bills related to mortgage servicing since 2009.

Since the September 2008 conservatorship, Fannie Mae and Freddie Mac have completed nearly 1.1 million permanent loan modifications, according to the FHFA's latest foreclosure prevention report. Data from the Office of the Comptroller of the Currency show that in the two years ending in the third quarter of 2011, modifications on Fannie Mae and Freddie Mac loans accounted for 40 percent of all loan modifications. Overall, the GSEs have completed more than 2.1 million foreclosure prevention actions since being taken over by the federal government.