Counterparties: Why your house is getting more valuable
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Two things you don‚Äôt expect to see together are the nation‚Äôs highest foreclosure rate and a housing shortage. Yet as Bloomberg‚Äôs John Gittelsohn and Prashant Gopal report, that‚Äôs exactly what Stockton, California is experiencing right now. While there are lots of foreclosures, they‚Äôre not happening at heavily-discounted prices. ‚ÄúPeople see a foreclosed home for sale in this area and they‚Äôre going to jump on it‚ÄĚ, said one longtime Stockton realtor.
There‚Äôs also evidence that Obama administration‚Äôs much-maligned foreclosure relief program is now picking up pace. Susan Wachter, a Wharton professor, was particularly impressed:
Changes to Obama‚Äôs loan-modification program had the biggest impact on reducing pending foreclosures since late 2010 by creating a template that lenders followed, Wachter said. That included incentives to compensate loan servicers for reducing principal on loans for delinquent borrowers. In January, the administration tripled the award to 63 cents for every $1 in writedowns.
Nationally, there‚Äôs been some very good housing news of late: the Case-Shiller home price index showed prices rising 3.6% nationally year-on-year. Especially impressive were the gains in areas that have been hard hit by the housing bubble: 20% in Phoenix, 7.6% in Detroit, and 7.4% in Miami.
Bill McBride of Calculated Risk points to new data showing that the government-supported refinance boom has been continuing. Refinancing has a smaller impact on the economy than does a boost in home sales, but it does provide a way for banks to finance a portion of the recovery by giving homeowners more cash to spend each month. In an economy that‚Äôs growing at less than 3% annually, even modest increases in consumer spending are helpful. One thing that certainly won‚Äôt help: unless Congress acts many of the very same homeowners who‚Äôve gotten help from their lenders will see those savings taxed as income. — Ben Walsh
On to today‚Äôs links: