- Personal bankruptcies tend to rise during periods of economic distress due to job loss and loss or reduction of income. Not surprisingly, this pattern was evident during this most recent economic downturn when bankruptcies rose nationally to a peak of 1.537 million in 2010.
- Since 2010, the number of bankruptcies has fallen nationally, led by Nevada, where personal bankruptcies fell 26.9% from 2011 to 2012. The decline in bankruptcies is a reflection of improved consumer balance sheets.
- However, consumers are also dealing with a stringent lending environment where heightened credit and reserve standards constrain many would-be home buyers.
- More information on local market trends is available in the 4th quarter Local Market Reports. (member log in required)
- Strong homes sales in 2012 helped to diminish the number of borrowers rolling into distressed situations. The increase in sales eroded inventories resulting in steady price growth. As a result, more people were able to refinance into affordable situations or dispose of their properties prior to foreclosure.
- In terms of improved 90-day delinquency rates, the top 5 markets were Las Vegas, Riverside, Cape Coral, Phoenix and Miami. Clearly, markets in the sand states that were hit hardest during the housing recession experienced the strongest improvement.
- Of the bottom five markets, most were in the Northeast, including New Jersey, New York, and Pennsylvania (bottom portion of figure above). Most of these states have judicial processes for dealing with foreclosed properties.
- The longer timelines for disposition of properties in these areas has slowed the local market transitions and muted price corrections.
- More information on delinquency trends is available in the 4th quarter Local Market Reports. (member log in required)
- Though sluggish, employment grew 1.7% between 2011 and 2012, or by 2.235 million new jobs. Job creation helped drive down the national unemployment rate from 8.9% to 8.1%. But improving conditions bring job seekers back to the job market, creating headwinds for the unemployment rate to move lower.
- This is a positive and necessary step in the transition back to economic health. Regionally, markets hardest hit by the housing downturn and subsequent economic crisis are seeing some of the strongest gains, with all five of the top 5 improving markets (pictured above) located in Florida and Nevada.
- Some markets are still experiencing rising unemployment rates. However, these figures belie the underlying trend of positive job creation drawing more unemployed workers back to search for jobs.
- Additional information on local market trends is available in the 4th quarter Local Market Reports. (member log in required)
- Housing construction is slowly ramping up. Housing starts and permitting have been at their strongest levels in years, with many markets exhibiting double-digit increases between 2011 and 2012.
- Construction is an important source of job creation, but may also be needed soon to quench supply/demand imbalances in certain local markets. Through construction has grown relative to 2011, it remains tame compared to pre-recession levels.
- Boise City, for example, saw a 78% increase in permits for construction between 2011 and 2012. Permits in 2012 were 72% lower than in 2005, though.
- This trend of rising permits is also important as it signals confidence on the part of builders who have been reluctant to start projects in the face of large inventories and tight lending.
- More information on local market trends is available in the 4th quarter Local Market Reports. (member log in required)
- 2012 began with atypically strong home sales, which carried through the entire year. As a result, inventories declined and price appreciation took off.
- Over the 4-quarter period ending in December, 131 markets or 88% of those monitored by NAR Research experienced rising median home prices.
- Of the top ten, the majority were in states experiencing a price rebound after a sharp downturn in the wake of the subprime crisis.
- While Nevada, California, Arizona and Florida all experienced sharp prices gains, several markets in the middle of the country, including Akron and Detroit, have also benefited from stable employment, record low mortgage rates and resurgent consumer confidence.
- Searching for information on your market? Price trends for additional markets are available in the 4th quarter Local Market Reports (member log in required)
Change in Personal Bankruptcies: 2012 vs. 2011