In the communities hardest hit by the housing crisis, some credit policy loosening will be needed to help the recovery, according to Pro Teck Valuation Services' latest Home Value Forecast.
Pro Teck pointed to Comptroller of the Currency Thomas Curry's recent speech, where he argued that banks are OK to make mortgages that exceed the limits on loan-to-value ratios if helping areas most affected by the downturn. The Waltham, Mass., company noted that the difference in credit availability helped to explain the difference in the housing recovery of
To further demonstrate this issue, Pro Teck chose to highlight the Phoenix metropolitan area, which landed in its top 10 cities based on home values in August.
In Scottsdale, which is part of the area, home prices have risen since 2011 and are now just 20% below their all-time high, having dropped to 37.5% below during the crisis.
Conversely, Apache Junction, Ariz., another city in the metropolitan area, remains 36% off of its all-time high, with home having lost more than half of their value in the city during the crisis. Pro Teck notes that Apache Junction is much more dependent on credit markets to move home prices.
LTV ratios in Apache Junction are historically around 90% versus between 73% and 77% in Scottsdale. Beyond the fact that less dependence on credit makes for easier credit and greater demand, the higher credit levels in Apache Junction also equated to more foreclosures. Consequently, raising LTV limits there would go a long way toward fueling the city's recovery.
Pro Teck's forecast also looked at the top and bottom metropolitan areas by home value. Bellingham, Wash., again topped the list of metropolitan areas with the highest home values, with Boise, Idaho, following in second. This month, two North Carolina metropolitan areas — Durham-Chapel Hill and Wilmington — made the list, as did two California and two other Washington cities.
The metropolitan area with the lowest home values was Detroit, followed by El Paso, Texas, and Huntsville, Ala.
