Market Studies

The number of contracts signed for purchases of previously owned homes climbed again in November, according to data released by the National Association of Realtors (NAR) late last week. The organization's pending home sales index rose 3.5 percent based on contracts signed in November. That follows a record 10 percent jump recorded for the month of October and beat even the most modest market expectations. NAR describes the trend as indicative of ""a gradual recovery into 2011.""

Experts agree that job creation is critical to getting the housing and mortgage markets back on track - both in curbing delinquencies by ensuring homeowners have the ability to make their mortgage payments and in giving consumers the confidence to become homebuyers. If unemployment remains elevated for an extended period, the housing recovery is expected to grind along at a snail's pace. Currently the nation's unemployment rate sits at a 26-year high. But what can we expect heading into the new year?

According to the latest forecast from Veros Real Estate Solutions, select markets in the United States can expect 2.5 percent to 3.5 percent appreciation in home values over the next 12 months. Although only mild appreciation is anticipated, approximately 40 percent of all major metro areas are forecast to see property values go up in 2011. Veros places San Diego, California, at the top of the list in terms of strong price gains. Homes in Reno, Nevada, on the other hand, are projected to lose the greatest share of equity.

Frank Nothaft, chief economist for Freddie Mac, says he expects long-term mortgage rates to hold below the 5 percent threshold throughout 2011, as key macroeconomic drivers provide a backdrop that supports a continued, albeit gradual, housing recovery. Turning to home prices, Nothaft says markets that have large inventories of for-sale homes and REO properties will continue to see home-value weakness in 2011, but he believes price indexes for the U.S. as a whole are close to bottoming out.

A report from Fitch Ratings paints a negative picture for the Title Insurance Industry in 2011. According to the report, the title insurance market is severely affected by the current state of the economy, most notably the sharp decline in real estate and mortgage activity. According to the report, the title insurance market is severely affected by the current state of the economy, most notably the sharp decline in real estate and mortgage activity.

The annual consumer credit forecast from U.S. credit bureau TransUnion foretells a 20 percent drop in national mortgage loan delinquencies by the end of 2011. TransUnion predicts that the number of delinquent accounts -- 60 or more days past due -- will drop to 4.98 percent from an expected 6.21 percent at the conclusion of 2010. The company anticipates at least double-digit declines in mortgage delinquencies in every state and the District of Columbia through 2011.

The research firm CoreLogic has released its official assessment of the monetary toll mortgage fraud has had on the industry in 2010. According to the CoreLogic Fraud Index, fraud losses for this year are estimated to be $11 billion. That figure is actually down from $14 billion in fraud losses during the 2009 calendar year. The company says while the probable rate of fraud has increased by 20 percent since last year due to higher risk government loan programs, actual fraud losses are lower because origination volume is down by 26 percent.

The commercial real estate market will see slight improvements in 2011, according to National Association of Realtors (NAR) chief economist Lawrence Yun. According to the economist, commercial real estate seems to be stabilizing. He says rising commercial leasing demand means overall vacancy rates have or are about to peak.

Moody's recently published 2011 Mortgage Servicers Outlook predicts more troubles ahead for servicers regarding foreclosure practices and documentation. The agency says more scrutiny of procedural irregularities could allow for definition of just how bad things are, but the added scrutiny could also lead to the discovery of even more problems with foreclosure practices. Moody's says foreclosure flaws will add at least three months to the timeline it takes to foreclose on properties.

Long-term fixed mortgage interest rates fell back this week, breaking a six-week streak of steep increases. Data released by Freddie Mac Thursday showed rates for 30-year fixed-rate mortgages averaging 4.81 percent, and 15-year rates at 4.15 percent. A separate study by Bankrate also showed declines for most loan products - all except for the larger jumbo 30-year fixed rate, which inched higher to 5.59 percent. Bankrate expects continued economic improvement to push mortgage rates higher as the new year unfolds.