The market fundamentals favor Real Estate Investors: The St.Louis Federal Reserve reported that mortgage delinquencies, among the top 100 banks, have been increasing and reaching 12%. While CoreLogic is reporting that the National foreclosure inventory has fallen 19.5% from one year ago, Fed’s report translates to 3.6 million borrowers, among the top 100 banks (excluding FHA owned mortgages), adding to potential foreclosures in the future.
The US Census data shows that the US homeownership rate fell to 65.4% in the fourth quarter of 2012 compared to 66% of the final quarter of 2011, and the rental vacancy rate decreased by 0.7% in the fourth quarter of 2012 compared to the fourth quarter of 2011. HomeUnion’s conclusion is that there will be plenty of inventory turn and a preference to renting over buying in a shifting economy, rather than a recovering economy.
The Case Shiller composite 20-city index was up 5.5% in November 2012 on a year-over-year basis, and down by 0.1% compared to October. The slight drop is attributed to the slower winter cycle.
There is positive news from the employment sector with ADP Employment Report showing that the private sector added 192,000 jobs in January, and the Bureau of Labor Statistics reporting an addition of 157,000 jobs to the total nonfarm payroll employment. Unemployment hovered around 7.8%. Significant contributions for 2012 were reported from property related industries reflecting Sandy clean up and housing recovery: Construction added 28,000 jobs; Mortgage companies added 29,000 jobs overall with mortgage brokerages adding 16,400 new hires.
Freddie Mac’s average for 30-year fixed rate is at 3.53%, and the average 15-year fixed is at 2.81%.