During a CoreLogic economic webinar Thursday, the company’s chief economist, Mark Fleming, Ph.D., was asked if the housing market has hit bottom and will it stick, as reports seem to be speculating.
The market in recent years was thought to have hit bottom twice before:
- Fleming noted that this happened in 2010 when prices peaked and year-over-year growth rate was positive. This was also a time when the home buyer tax credit was available. House prices stabilized, but the problem with that, Fleming explained, is that when the tax credit expired, demand disappeared and prices continued to fall again.
- We again saw some stabilization in the beginning of 2011, Fleming said, but the economy fell off the rail with the European debt crises, the Japanese earthquakes, and our own debt ceiling debate. Then, Fleming said, consumer confidence crashed, everyone stopped wanting to buy, demand went down, and prices declined again.
Is the third time a charm and have we finally found the bottom?
“The longer we go now without any major shock, the more strength this recovery will have and the more it will be able to sustain without significant detrimental impact any shocks that might come,” Fleming said. “So time then is one of our most helpful forces at the moment.”
While uncertainty seems to surround whether or not the market has truly hit bottom, one trend does appear to be more stable. With recent reports of declining delinquencies, Fleming said he expects to continue to see fewer delinquencies and foreclosure starts in coming years. This is partly due to the performance of loans originated between 2009 and 2011, which Fleming explained are benefiting from tighter underwriting standards compared to earlier loans.
Recently, CoreLogic reported delinquencies were down, with the share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and REO assets, dropping to 7 percent in March 2012 from 7.5 percent a year ago. As for foreclosure inventory, Fleming pointed out that a migration has taken place where the concentration of states posting higher foreclosure rates moved from the West coast to eastern and southeastern states, such as New Jersey, New York, and Florida.
During the webinar, Fleming also provided some clarification on house price indexes and explained that indexes reporting year-over-year prices showing negative numbers amid positive home sales reports might have to do with what was happening a year ago, and said sometimes negative numbers are negative because of a really good spring season a year ago.