U.S. Foreclosures Index Paints Brighter Picture For 2009

The nation's foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery, according to the 2009 Outlook from ForeclosureS.com, a real estate and property information and education specialists.

"Recovery is underway. Affordable is back in the housing market," said Alexis McGee, real estate expert, educator, and president of ForeclosureS.com. "In 2009, housing will not only recover, but we'll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market."

With 4.5% fixed mortgage rates, housing prices lower than they were 'pre-housing bubble', commodity prices lower, tax credits available for homebuyers, and the government eager to stimulate our economy, for the first time in years I can see prices rising again in 2009, adds Ms. McGee. The latest index by ForeclosureS.com shows a slight drop from 84,534 to 84,291 in the number of properties repossessed by lenders following foreclosure in November over October. But that's off nearly 21% from September's 106,415 REO filings.

"Certainly some of the drop reflects growing results of government and private efforts to keep homeowners in their homes," says Ms. McGee. "But the recovery takes shape when you factor in other things like what the National Association of Realtors calls 'solid' gains from a year ago in existing home sales in some key areas, and the fact that many of the same areas are seeing dropping home prices."

California is a great example of what's happening now and what lies ahead for the housing sector. Long a leader in the subprime mortgage mess and rising numbers of foreclosures, the state's foreclosures have slowed significantly, she adds.

The latest U.S. Foreclosure Index numbers show November REO filings in the state down to 15,978, down 6.55% from October and off nearly 50% from September. Home prices there have come down, too, as much as 39.4% from the third quarter from a year ago in some areas like Riverside-San Bernardino-Ontario, according to NAR numbers. That's left many homeowners that bought their homes at high price points with upside down mortgages-they owe more than the value of the home. But it's also made homes more affordable for plenty of other people. Solid and in many cases rising existing homes sales support that, adds Ms. McGee.

In November, another perennial leader in foreclosures, Arizona, saw its REOs and pre-foreclosure filings drop (down 5.19% and 5% respectively), according to U.S. Foreclosure Index numbers.

The pre-foreclosure picture when averaged nationally isn't quite as bright. Pre-foreclosures include notice of mortgage default and/or foreclosure auction. Amid all the negative economic news across the nation, pre-foreclosures for November were up 5.57% from October with 27.1 of every 1,000 households across the country facing some kind of foreclosure action (177,254 vs. 167,906 filings in October). But that's still down nearly 2% and more than 7.5% from March's high, according to U.S. Foreclosure Index analysis.

"Pre-foreclosure numbers likely climb in early 2009," says Ms. McGee. "Too many homeowners already are just too overextended and likely won't seek help to work out their delinquent mortgages until after a pre-foreclosure filing against their property. That filing, it seems, is the wake-up call for many to get the help they need and sell.

Potential homebuyers and investors on the other hand, will find the bargains growing in 2009, she said. "As the year progresses more bright spots will emerge, too, both in terms of foreclosure numbers and housing markets as efforts to work with strapped homeowners really begin to take root."

She says the hardest hit housing markets have already hit bottom and others will follow in 2009.

"I wish my crystal ball could pinpoint everything that's going to happen with housing markets in the next 12 months, but there are just too many variables. Third-quarter National Association of Realtor numbers actually show existing home sales picking up in about 20 percent of the areas studied. And, given the uncertainty and volatility of the stock market combined with all time low interest rates, extremely affordable low priced homes, and all the choices out there, 2009 is an excellent time to buy real estate. Properties, especially foreclosed ones, will be highly discounted, lenders are motivated to work with buyers, and the opportunities are abound. The bottom line to keep in mind: What goes down absolutely positively will go back up again."