Market Studies

Clear Capital sees signs of market stability as we move into the summer months. New data released Thursday by the company shows that U.S. home prices continue to fall, but the 2.3 percent drop recorded for the three months ending in May was half the decline seen in the previous month's report. Clear Capital says the median price paid for distressed properties has started to rise, indicating the REO market is seeing increased activity toward the upper end of the price range and helping to rein in the depreciating trend of the past several months.

The Federal Reserve has published a new rendition of its popular Beige Book, relaying insight from professionals in the field on regional market conditions. A number of the 12 Fed districts noted improvements in overall credit quality, specifically Philadelphia, Cleveland, Richmond, Kansas City, Dallas, and San Francisco. New York was the only district to report rising delinquency rates on consumer loans, but it saw delinquencies decline for commercial loans and mortgages.

Delinquency rates among different groups of commercial and multifamily mortgage investors were mixed in the first quarter, the Mortgage Bankers Association (MBA) reports. Delinquency loans held in commercial mortgage-backed securities (CMBS) reached their highest level since 1997, but MBA says the climb was slower than in recent quarters. On the other hand, delinquency rates for other investors, including Fannie and Freddie, remain below levels seen in the last major real estate downturn - some by large margins.

The number of mortgage borrowers who owe more on the loan than their home is worth decreased slightly during the first quarter, but CoreLogic sees a problem area among homeowners with second mortgages. The company found that 10.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity as of the end of March. CoreLogic says the underwater ratio of borrowers with home equity loans is more than double that of borrowers without second mortgages.

More than three-quarters of foreclosure counselors say the borrower experience when turning to the government's flagship modification program for relief is sub-par. The Government Accountability Office (GAO) says counselors it polled cited concerns about HAMP trial denials, including long waiting periods and documentation issues. Some 39 percent said paperwork had been lost or needed to be resubmitted, while 46 percent said it typically takes seven months or more to receive a decision on a trial mod application.

Even with the highest foreclosure rate in the nation, Nevadans are not using bankruptcy to keep their homes, according to Columbia Law School professor Ronald Mann. Mann's analysis shows that Nevada's bankruptcy filing rate so far this year is 5,176 filings per million adults, more than twice the national rate of 2,562 per million. At the same time, he notes that Nevada's percentage of filings under Chapter 13 of the bankruptcy code, which often allows debtors to keep their property, trails the national average.

The rate at which distressed loans held in U.S. commercial mortgage-backed securities (CMBS) are being transferred to special servicers continues to decline, according to Fitch Ratings. The agency reports that approximately $85.7 billion in loans were being worked out by special servicers as of the first quarter of 2011. Specially serviced CMBS loans reached a peak in the second quarter of 2010 at $91.2 billion. But Fitch has noticed a declining trend ever since and the agency expects it to continue.

Radar Logic says strong job gains will not bolster housing despite opinions from economic experts. The firm predicts a recovery in housing values will precede a recovery in the economy, spending, and jobs. Economists say the sliding job market, along with falling consumer confidence and other weak indicators mean the economic recovery has hit a ""soft patch."" There is a strong correlation, Radar Logic explains, between Americans' perceptions of their own wealth as expressed in the value of their homes and their willingness to recycle some of that wealth into the economy.

The national unemployment rate edged up to 9.1 percent in May from 9.0 percent in April, according to figures released Friday morning by the U.S. Department of Labor. The economy added just 54,000 jobs in May, the weakest showing in eight months. Employment increases averaged 220,000 over the prior three months. Freddie Mac's chief economist Frank Nothaft says the economy needs to add over 250,000 new jobs per month, on a sustained basis, to reabsorb all the jobs lost since the recession.

While a number of closely-watched home price indices show national readings have slipped into a double-dip, Altos Research says it's come and gone. The firm notes that the latest Case-Shiller findings declaring a new post-recession low are based on data through the end of March. Since that time, Altos has recorded a steady uptick in prices for both major metros and mid-city markets across the country. The firm expects to see a rising and falling pattern for several years and believes the double-dip is really just the start of the next housing cycle.