No one is ready to celebrate, but we’re getting back to where the country was before the financial crisis and recession.
New York (PRWEB) June 02, 2014
Strategic Consulting Services (http://www.strategiccs.org), a New York firm providing client-focused financial consulting for consumers, sees American home and mortgage trends slowly meeting pre-recession levels. Recovering slowly from the crisis of foreclosures and falling home values, mortgage statistics show a much improved situation for home equity and the home lending landscape in the United States. Trends show home equity being restored along with underwriting guidelines to accommodate less-than perfect borrowers. This is good news for current homeowners who had seen their home values decline as a result of the financial crisis.
On the other hand, the cost of new mortgages has increased with interest rates, which means people aren’t buying as many homes. The sale of previously occupied homes is the lowest in years and homebuilders have struggled with sales for years. Even as higher rates and tighter regulation have made it hard for some to qualify for a home loan, bankers are still trying to sell mortgages. The response from banks recently has been to require smaller down payments and to loosen underwriting requirements.
Surprisingly, the sale of property for as cash purchases accounted for almost 43% of residential property transactions in the first quarter of 2014. This activity reflects affluent consumers who want to secure bargains at a lower price for investment purposes. The cash activity shows investors are comfortable enough with home values to feel secure they can flip the property for a profit.
From a mortgage perspective, delinquencies are down, the lowest in six years. The seasonally adjusted delinquency rate on all home loans fell to 6.11 percent in the first quarter. This puts the rate at its lowest level since the fourth quarter of 2007, when America entered its deep recession. Foreclosure notices, scheduled auctions and bank repossessions are 20 percent below the 2013 level, according to RealtyTrac. This was the 43rd consecutive month foreclosure activity was down on an annual basis. U.S. foreclosures peaked at 2.9 million properties with filings a month in 2010. "What this means is that we are getting closer to pre-recession levels of foreclosure activity," RealtyTrac vice president Daren Blomquist told Reuters.
As troubled properties have been worked through the system and home prices have risen, the housing outlook is positive for America. Today only 10% of homes are underwater and owe more than the property is worth, compared to 34% four years ago. Home affordability is also better than it was before the housing bubble and financial crisis, with a national average of 22% of income going to paying the mortgage. Today we face a more secure housing market with tighter lending requirements in place, speculation of great returns removed, and big changes to the back-end of mortgage finance. The growth in home prices seen around the country today is solid growth and not based on a bubble waiting to collapse. Markets that are under- or over-valued are working to equilibrium and are greatly improved without the speculation that was rampant from 2002 to 2005.
“Despite the stream of horror stories about improper foreclosures or bank issues, there have been a stream of good indicators within the housing market. The steady increase in home values, reform to mortgage finance, availability of loans, change in American spending/saving habits, and improved consumer confidence all point towards a housing recovery. No one is ready to celebrate, but we’re getting back to where the country was before the financial crisis and recession,” says Ben Kittle, Senior Financial Consultant at Strategic Consulting Services. ”This means that the home can again serve its important role as the primary investment tool for Americans, allowing them to build equity in addition to providing shelter and foundation for a family.”
About Strategic Consulting Services
Strategic Consulting Services is a financial services firm with teams specialized in Debt Management, Mortgages and Business Services. With a comprehensive client-focused approach, the Company provides assessments looking beyond immediate financial issues to help clients build greater financial strength with smart habits and choices. Since 2007, Strategic Consulting Services has helped individuals and small businesses create savings plans, reduce debt, and make wiser spending choices. For more information, visit http://www.strategiccs.org.