Home Prices Growing as Foreclosures Decreasing

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A decline in foreclosures is correlating to rising home prices in many counties throughout the country, according to DataQuick’s Property Intelligence Report.

For example, out of 42 counties analyzed by the San Diego-based analytic firm, 28 saw foreclosures decrease on a monthly basis in March. At the same time, home price growth was positive in 38 of the 42 reported counties over the last month.

Furthermore, some of the hardest hit markets in California, Nevada, Arizona and Florida are experiencing the quickest turnaround in terms of home price growth.

Compared to last year, Maricopa County—which is the Phoenix region—saw its price index increase from 102 to 126 in March. Another area with a notable rise in its home value index on a year-over-year basis was San Jose, up 17 points to 141.

Both of these cities also had a decline in the number of foreclosure filings in March 2013 versus a year ago. Phoenix had 975 fewer foreclosures in March 2013 compared to the same time period last year, while San Jose was down by 98 foreclosures.

Despite improvements in home prices and foreclosures on the decline in many counties nationwide, one of the most important aspects for a sustained housing recovery is stable job growth, according to one executive from DataQuick.

Gordon Crawford, vice president of analytics for DataQuick, told National Mortgage News in an interview that housing demand will remain strong as long as people have a job where they can afford to obtain a mortgage rather than rent a housing unit.

He added that the economic recovery and job growth prospects were positive at the beginning of the past three years, but this was then followed by poor numbers in the spring and summer. A similar pattern seems to be repeating itself this year and could “potentially contribute to eventual reductions in the demand for housing,” Crawford mentioned.

In March, employment grew by only 88,000 jobs. Crawford said that based on figures from this Census Bureau’s report, between 200,000 to 220,000 jobs need to be created to break even with the current population growth.

“Concerns about the continued strength of the recovery and job security, tax increases, and uncertainty about domestic fiscal issues are dampening economic growth and will eventually contribute to eventual reductions in demand for housing,” DataQuick said in the report.

Another highlight from this month’s PIR was a slowdown in home sales. Only 10 of the 42 counties reported an increase in month-over-month sales activity. However, compared to prior years’ sales, 28 of the 42 counties had an increase in sold housing units.

Crawford said investors played a major role in sales activity because they took advantage of buying foreclosed properties at a discount, therefore reducing the supply available for a prospective buyer.

Some of the notable markets where foreclosure sales rose on a monthly basis included Boston, Palm Beach, Fort Myers and Memphis.

“While, to date, these markets have demonstrated tremendous resiliency, the next step is that investors will soon move onto other markets to begin the cycle of foreclosed property purchases that will return market rates to a level of stabilization that can be sustained by the underlying economies in these markets,” Crawford stated.