Homeowners who had experienced a foreclosure or short sale are starting to return as homeowners, although access to financing is posing a constraint, according to information in the August REALTORS® Confidence Index Survey report.
- About 23 percent of respondents reported working with a buyer who previously experienced a foreclosure or short sale since 2005.
- About 46 percent of responding REALTORS® reported that these buyers they worked with could not obtain mortgage financing.
- In reference to these buyers who did not obtain mortgage financing, 65 percent of respondents reported that the reason was related to the previous foreclosure or short sale.
- The net worth of households and non-profits is now more than $5 trillion above its pre-recession peak at $74.8 trillion in the second quarter of 2013 according to data from the Federal Reserve Flow of Funds.
- This level indicates a sharp recovery—growth of 11.5 percent from a year ago. This is the 4th consecutive quarter of year over year growth exceeding 9 percent and the 15th consecutive quarter of positive year over year growth.
- While a reduction of debt led to some increase in net worth earlier in the recovery, the last 3 quarters have showed that total liabilities were roughly stable after 16 consecutive quarters of year over year decline.
- The bigger driver of increases in net worth now is the recovery of home and stock prices. Household real estate accounts for $18.6 of the $88 trillion in household assets and owner’s equity in household real estate is $9.3 trillion of the $70 trillion in net worth. In fact, in the recent quarter, gains were split roughly equally between real estate and financial assets, with each seeing growth between $600 and $700 billion.
- During the recession, the net worth of households and non-profits—the sum total of tangible assets such as real estate and financial assets such as savings and equities minus liabilities such as mortgages and other debt—took a beating, declining by roughly $13 trillion from the first quarter of 2007 to the first quarter of 2009..
- Households and non-profits are grouped together because current data collection by the Fed is not at a level of detail that would make separation of the two groups possible.
In line with the broad decline in foreclosure inventory, distressed sales continue to make up for a smaller share of overall residential sales. Approximately 12 percent of respondents who reported a sale in the August REALTORS® Confidence Index Survey sold a distressed property, substantially down from levels seen a few years ago.
For the past 12 months, properties in “above average” condition have been discounted by an average of 10-11 percent, while properties in “below average” condition were discounted at an average of 15-20 percent.
- Fifteen percent of firms are franchised firms.
- The typical firm has been affiliated with their current franchise for 11 years.
- Eighty-seven percent of firms reported their current franchise affiliation improved their firm name recognition.
- Many franchised firms have the capability to offer in-house ancillary services to real estate clients. The most common in-house service is business brokerage.
- For more on the 2013 Firm Survey, click here.
- Housing equity rose 30% or more than $2 trillion over the past year as prices rose, home purchases rebounded, and mortgages outstanding continued to decline according to second quarter data from the Federal Reserve’s Flow of Funds.
- Mortgage debt outstanding fell by slightly less than $200 billion while the market value of household real estate surged 12 percent, topping $18.6 trillion.
- The rise in the value of household real estate is welcome relief to owners, but as prices rise and affordability starts to wane, some wonder whether we are seeing a return of a housing bubble. Here are some reasons that is unlikely the current case.
- In spite of the rise in house prices, the total value of household real estate remains roughly 18 percent below the peak in 2006. Additionally, mortgage debt has been on the decline.
- The housing market has rebounded in spite of falling mortgage debt in large part because of all-cash or high cash purchases. Scholastica Cororaton discusses the latest results from the Realtors® Confidence Index here, which show that 29 percent of recent transactions in July were all-cash purchases. This trend has been quite consistent over the last few years in spite of low mortgage rates.