The U.S. economy is poised for moderate growth in 2012, but unlike prior recessions, the housing sector won’t lead the recovery, according to Mark Fleming, chief economist for CoreLogic.
“We're experiencing a high degree of abstinence in the market, but I think this is the year we're finally going to see something happen,” Fleming said during a presentation that kicked off SourceMedia’s Mortgage Servicing Conference, ongoing this week in Dallas.
In 2011, moderate growth was tempered by the natural disasters in Japan, the foreign debt crisis, and the U.S. federal budget debacle. “As long as those things don't happen again this year, we should see some improvement in the economy this year,” Fleming said.
According to Fleming, the serious delinquency rate of mortgage borrowers is declining and overall mortgage distress is tempering. He expects to see an ever growing decline in the inbound flow of delinquencies.
“If you're a subprime loan originated in 2005 that's still out there, you'll probably keep paying,” Fleming said.
Still, real estate owned and short sales account for 27% of all home sales. While short sales produce a higher return for investors over REO sales, they’re still not the dominant form of distressed asset sale.
In addition, foreclosure backlogs are still significant in judicial states, where the process is taking longer to complete. With the exception of Florida, Fleming said that foreclosure pipelines are diminishing in the “sand states” where rates have been the highest during the downturn. Now, foreclosure pipelines are highest in the Southeast and Northeast portions of the U.S.
Fleming said there’s currently an eight-month supply of homes for sale on the market, but the rental market is at a six-month supply. Rental rates are increasing, which makes REO rental programs more appealing. (For complete coverage of SourceMedia’s servicing show see the Monday paper edition of National Mortgage News.)
