June marked the third straight month in which home prices rose across the board. CoreLogic, a leading provider of housing data, recently released its monthly Home Price Index. The index registered a modest increase in home prices across the nation by 0.7 percent in June 2011 compared to May 2011. This is the third straight month in which the battered housing market experienced gains rather than losses.
While this is certainly welcome news, don’t get too excited. Despite the increase, prices are still 6.8 percent lower than they were just 12 months ago.
Mark Fleming, chief economist for CoreLogic, spoke to the impact that foreclosures and short sales (distressed sales) continue to have on pricing: “While there is a consistent and sustained seasonal improvement in prices over the last three months, prices are lower than a year ago due to the decline in prices after the expiration of thetax credit last year. The difference between the overall HPI and our index excluding distressed sales indicates that the price declines are more concentrated in the distressed sales market.”
And how about this: The foreclosure crisis may be a long way from over. Industry experts like Mark Teytel at Realty1st, who works with hundreds of foreclosures and short sales in Atlanta every year, suggest that as bad as the situation is, we could be looking at a 50-1 ratio where for every foreclosed home out there, there’s another 50 waiting in the wings. While his prediction is pretty far-out, if it turns out to be even marginally correct, the effect on existing home prices would be devastating.
Michael Kraus of Zillow writes of the shadow inventory wild card, real estate properties that are either in foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. He says, “while we don’t have large-scale foreclosure moratoriums in place right now, we do have a fundamentally slower and longer foreclosure process than we had prior to the fall of 2010 (when robo-signing foreclosures became bad business practice) which means that we are accumulating a big pile of foreclosures in the wings versus dumping them onto the market.”
Ilyce R. Glink is an award-winning, nationally syndicated columnist, best-selling book author, and radio talk show host who also hosts “Expert Real Estate Tips,” a Internet video show. She owns and operates several websites including ThinkGlink.com, ExpertRealEstateTips.net, LawProblems.com, and HouseTask.com, as well as Think Glink Publishing LLC, a privately held company that provides consulting services as well as editorial content and video for companies and non-profit organizations. An in-demand speaker, she appears frequently on CNN, CNBC, NPR, and in local media outlets across the country.