2012 – HOUSING RECOVERED IN 6 SURPRISING WAYS
While the sluggish U.S. economy crept upward in 2012, the housing market improved at a much faster rate than anyone expected. Total home sales increased 6.3 percent in 2012, the largest increase since 2006. Overall, 4.2 million homes sold – inching closer to the average of 5.5 million a year the country experienced before the crash.
At the beginning of 2012, many experts thought the opposite would happen — with so many foreclosures on the books and properties still underwater, many anticipated home prices would fall or remain stagnant. CoreLogic had a particularly-pessimistic outlook at the time: “The housing market is beset by headwinds. It’s hard to see house prices in the long run rising without income growth.”
But instead, so much negative equity on the market actually helped hard-hit areas recover quickly by limiting sellers and keeping supply low. Demand for rentals spiked and helped distressed properties pay the bills, keeping more of them off the market, and mortgage servicers came through by developing alternative ways to help borrowers stay in their homes or leave with minimal losses to the bank.
Here are some major factors that drove the recovery, according to the CoreLogic report:
- Decline of Real Estate Owned sales and inventory. Bank-owned (or REO) sales declined more than 20 percent to 600,000, the third consecutive year of decline. This helped boost home prices because REO’s typically sell at 20 percent less (or more) than other homes and can also drive down prices of neighboring properties. For those REOs on the market, the average sale price rose 3 percent over the year to $135,000 in October 2012. “Traditional by government-sponsored HAMP mortgage modifications, as well as other foreclosure resolutions with the banks.
- Home price growth is happening across diverse geographies. Over three-fourths (78 percent) of geographical areas analyzed in the report had year-over-year appreciation – the highest share since 2006.
- Foreclosures decrease by 23 percent. They went from 72,000 in November 2011 to 55,000 in November 2012.