According to a new report, foreclosures plummeted 34 percent in 2011 and reached the lowest mark since the recession began. Though that’s good news, the numbers are still daunting.
RealtyTrac Inc., said about 1.9 million homes began their journey on the foreclosure process last year. That number could also be misleading because foreclosures slowed down last year due to confusion over legal provisions and documentation, the Associated Press said.
Quite a few of the large U.S. banks took a hiatus from the process in 2010 as they revisited errors in previously filed cases. As they clear the backlog and surge forward with new defaulters, the numbers are expected to see a bump this year. RealtyTrac believes the number of foreclosed properties this year would surpass last year’s figures.
“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” Brandon Moore, RealtyTrac CEO said in a release. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process.”
The AP said that high unemployment, diving home prices and a slow housing market overall are the main factors responsible for mortgage payment delinquencies. Many homeowners today owe more on their homes than what they are worth, the story said.
Housing Market Remains Frail
Thousands of homeowners are getting help from the government in dodging foreclosures, but the housing market continues to be delicate.
In November, the Obama administration handed 26,877 homeowners a rebate on their mortgages. That’s on top of the 26,102 homeowners in October who benefited from lowered mortgage payments. But, that still hasn’t chased away the ominous cloud weighing down on the housing market, according to a government report.
The U.S. Department of Treasury and the Department of Housing Development say there have been some improvements in the market over the last year, but the overall outlook remains “mixed.”
“It’s clear that we’ve made important progress in recovering from this housing crisis,” said HUD Assistant Secretary Raphael Bostic in a release. “But with so many homeowners still struggling to pay their mortgages or move into more sustainable loans, we can not rest on our laurels.”
The Obama administration is revamping its housing programs to make them more effective, according to Reuters. The Federal Reserve has also cautioned that a weak housing market could hamper broader economic growth. Hopefully, the administration’s efforts at aiding a market recovery will continue to yield results.
Homebuilding Company Reports Spike in Orders
Is the market finally bottoming out? Yes, says the country’s third largest homebuilder Lennar Corp. As foreclosures are eroding, homebuyers are starting to hunt for new homes. Lennar saw a rise in orders for the third straight quarter, according to Reuters. The company reported a 20 percent jump in new home orders for the September-November period, the story said.
The news was received with much cheer on Wall Street. On Wednesday, company shares shot up 9 percent to a more than three-year high of $22.52 on the New York Stock Exchange, Reuters reported. It also helped lift the stock prices of peers such as KB Homes, PulteGroup and DR Horton.
Lennar CEO Stuart Miller told analysts and media on a conference call that he is “cautiously optimistic” about 2012. According to Reuters, he said high rents were driving customers to buy new homes. And they were helped by good deals on home prices and record low interest rates.
Bank Economists Forecast Little Recovery in Housing for 2012
The U.S. Economy would grow modestly this year, according to top economists from 11 large American banks, but they foresee little improvement in employment numbers or home prices. Dow Jones reported that the bank economists expect the economy to grow by 2.4 percent. But a depressed job and housing market and a shaky European economy could play foul, the report said.
Housing prices will continue on a downward spiral, but at a slower pace, according to Dow Jones. That’s a big cause of worry, because the housing market can dampen overall enthusiasm about the economy.
Home prices are expected to drop 0.6 percent this year, Dow Jones said.