Market Studies

In the second quarter of 2011, single-family home prices fell 5.9 percent on an annual basis, according to the latest national Fiserv Case-Shiller home price indexes released Wednesday. This continuation of the double-dip that started in 2010 is not the end, according to Fiserv. In fact, the company predicts prices will continue to fall into the coming year -- dropping another 3.6 percent by the first half of 2012. However, Fiserv does see a light at the end of the tunnel.

After declining between the first and second quarters of this year, Zillow says negative equity rose again in the third, reclaiming all of the previous quarter's decline and then some. Zillow's latest market analysis indicates 28.6 percent of American homeowners with a mortgage owed more on the loan than their home was worth as of the end of September. The company says a lower rate of foreclosure liquidations and relatively flat home values combined to increase negative equity over the three-month period.

The national mortgage delinquency rate edged up during the third quarter of 2011, marking the first increase in nearly two years, according to TransUnion. The credit bureau calculates the delinquency rate as the percentage of borrowers 60 or more days behind on their payments, excluding those that are already in foreclosure. The rate increased to 5.88 percent at the end of September. TransUnion expects the sudden upward movement to be a temporary one, driven by unanticipated financial shocks during the third quarter.

While the roots of the financial crisis can be found in the nation's residential housing sector, it's now exposure to bad commercial real estate loans that's battering banks' balance sheets. The research firm Trepp LLC has released a new report on recent U.S. bank failures and the drivers behind their demise. In total, 11 banks failed during the month of October, collectively with $617 million in nonperforming loans. Commercial real estate loans made up 65 percent of the nonperforming balance, while residential real estate was 22 percent.

CoreLogic released its latest market analysis of residential property values Monday. The company's index shows U.S. home prices fell another 1.1 percent between August and September. It marks the second consecutive monthly decline recorded by CoreLogic and signals price depreciation is deepening. The company's previous report documented a 0.4 percent drop between July and August. CoreLogic says home prices are adjusting to correct the supply-demand imbalance, and as a result, declines will continue through the winter.

Foreclosure starts among private-label residential mortgage-backed securities (RMBS) have been rising toward historic averages, which will lead to an influx of distressed properties bringing downward pressure to the housing market, according to Fitch Ratings. Foreclosure starts among loans that have been delinquent for six months or more have almost doubled in the past five months. Fitch says it's a sign that servicers are playing catch-up on actions that have been delayed over the past year.

Private investors in residential mortgage-backed securities (RMBS) comprised of jumbo mortgage loans are dealing with a greater risk of strategic defaults, according to Moody's Investors Service. The company's analysts base this assumption on the fact that jumbo RMBS have large populations of current borrowers with high loan-to-value (LTV) ratios. In contrast, the subprime sector faces the lowest potential for future performance deterioration because its weaker borrowers are already delinquent or have defaulted.

Recording a slight decrease in delinquencies in its preliminary third quarter estimate, Trepp predicts full market recovery will not occur for years. Residential mortgage delinquencies fell 0.3 percent in the third quarter to 12 percent, according to Trepp's preliminary data. This is down 1.1 percent from last year. The research firm says the slow rate of improvement reflects the high volume of foreclosures and weak price trends that still plague the nation's housing markets.

Temperatures are falling, and so are home prices in most local markets. Clear Capital says it's expecting another long winter as the housing industry tries to cope with the downward forces of weak demand, record-low consumer confidence, and distressed inventory. The company says the seasonal gains seen during the stronger spring and summer months have not been enough to push year-over-year home prices into the black. Clear Capital's October index puts national home prices 2.8 percent below a year ago.

The nation's unemployment rate slipped to 9.0 percent in October, as employers added 80,000 new jobs to their payrolls, according to the U.S. Department of Labor. Officials called the rate ""little changed,"" down from 9.1 percent the month before. The unemployment rate has remained in a narrow range from 9.0 to 9.2 percent since April. Government data shows that there are 13.9 million people out of work in the United States. Extended unemployment has become the biggest driver of mortgage delinquencies.