Here on the Summa blogs, we’ve repeatedly pointed to the foreclosure mess when assigning blame for the current housing slump, regularly observing that the huge delay in processing foreclosures has resulted in an unwillingness to buy new and non-foreclosed homes due to the price disparity, driving down overall home prices. But just how bad is the situation? Well, according to Lender Processing Services, very; although it is steadily improving.

In October, foreclosure inventories hit 4.29 percent of all active mortgages, the highest ever on record. Meanwhile, loans already in foreclosure had, on average, been delinquent for 631 days since last payment, a staggeringly high number and also an all-time record.

On the plus side, the average number of days delinquent for loans 90-or-more days past due (but not yet in foreclosure) decreased again, for the second straight month. Better yet, overall mortgage delinquencies dropped yet again, with a total loan delinquency rate of 7.93 percent in October. Total delinquencies are now almost 30 percent lower than the peak in January 2010.

The big hold-up in terms of foreclosures appears to be that states which exclusively use the judicial foreclosure process—meaning proceedings must happen in a court of law—simply aren’t equipped to deal with the huge number of foreclosures that have cropped up over the last couple of years, causing large legal bottlenecks. States that use non-judicial methods, which don’t require as much time or resources, now have half the foreclosed-home inventory percentages as judicial states do. Additionally, non-judicial states have four-to-five times the foreclosure sales rate.

There are a number of reasons that home sales should be seeing a prolonged downturn, such as extremely strict lending standards (although very low interest rates), a spike in contract failures and unemployment rates that continue to be higher than ideal. However, despite all that, the National Association of Realtors (NAR) reports that home sales actually saw an uptick again in October.

In fact the recently released data from October showed dually positive trends.

First, the increase in sales, with total completed sales of single family, townhomes, condos and co-ops crawling up 1.4% from September, to a seasonally-adjusted annual rate of 4.97 million through October. While a slight increase over September, it’s also a 13.5% jump compared to October of 2010. According to NAR, the market has remained relatively steady, simply at a lower total level than is ideal.

Contract failures—cancellations caused by declined mortgage applications, home inspection issues, loan underwriting/appraisal value problems, job loss and the like—were at a staggeringly high 33% in October, which certainly shoulders part of the blame for the lower sales.

The second reason for optimism given October’s data was the continually declining total home inventory. By the end of October, the number of existing homes for sale nationally had fallen another 2.2% to 3.33 million. That means that at the current sales rate, it would take 8 months to sell all homes on the market, down from 8.3 months in September.

All in all, the housing market still has a lot of recovering to do, however stringing together a few consecutive months with this kind of positive trending will certainly help get the economy back on the right track.

For the first time in a while, new reports released regarding the economy show almost all good news. According to data that came out today, claims for unemployment benefits dropped to the lowest level in seven months in October. In that same month, new housing construction permits jumped to the highest level since March of 2010.

Housing starts actually decreased in October by 0.3 percent to a 628,000 annual rate (September’s pace was 630,000), but that decrease was less than forecasted. It was widely expected that the annual rate could slip all the way to 610,000 in October.

However, building permits, a proxy for future construction, jumped 10.9 percent to an annual pace of 653,000 in October, significantly more than expected. There was a 5.1 percent increase in permit applications for single-family homes, while applications for multifamily domiciles saw an increase of 24.4 percent.

Supplementing the good news on the housing front is equally good news regarding jobs. In October, claims for state unemployment benefits fell 5,000 to a monthly total of 388,000. That pushes the four-week average (often measured to minimize the effect of seasonal factors) below 400,000 for the first time since April.

All in all, this data seems to point toward an economy that is slowly stabilizing and perhaps in the early stages of recovery. The government will release an employment count on December 2nd, which is expected to show increased employment growth and a total rise in payrolls. Meanwhile the housing data indicates a rising confidence in residential real estate, as well as activity that should stimulate the hard-hit construction industry.

A couple weeks ago, the federal Home Affordable Refinance Program (HARP) announced a forthcoming change to their rules that would offer refinancing options to many paid-current homeowners who owed more on their mortgage than their house is worth. If some recently released data is any indication, those rule-changes may be especially helpful in the Portland metro area.

According to real estate monitoring site Zillow.com, a staggering 32.3 percent of mortgages in the Portland area are underwater (meaning more is owed than the home is worth), nearly four percent higher than the 28.6 percent number nationwide, but by no means even the worst of the country’s big cities. (Over 46 percent of Chicago area mortgages are underwater, for example.)

If there’s a silver-lining however, it’s that the percentage of underwater Portland homes is down nearly one percent, from 33.1 in the previous quarter.

Also, Portland’s home prices have remained relatively flat after ostensibly bottoming out in February, preventing further mortgages from slipping underwater.

Zillow Chief Economist Stan Humphries cites the perception of these numbers as being a leading cause of the current housing slump, more than any specific and objective problem. Says Humphries, “We’re clearly dealing with a crisis of confidence that is keeping potential buyers on the sidelines, fueled largely by high unemployment and more general economic uncertainty.”

It remains to be seen how much the reworked HARP guidelines will affect Portland’s housing market. But as always, stick with the Summa blogs for information as it emerges.

While recent modifications to the Home Affordable Refinance Program (HARP) hope to help prevent some foreclosures, another federal organization is offering recourse for victims of wrongful foreclosures.

On November 2nd, the Office of the Comptroller of the Currency announced the formation of the new Independent Foreclosure Review, which had been hinted at by the OCC and Federal Reserve as far back as April of 2010. Reviews will be conducted by an independent agency and will allow homeowners to ask for review of how the lender went about conducting the foreclosure.

Being that this isn’t just a forum for people who weren’t able to make payments to attempt to get their house back, it’s intended for homeowners who went about everything the right way and were erroneously foreclosed upon anyway, there are specific guidelines to qualify for the Independent Foreclosure Reviews. Interested parties must meet the following criteria:

• Their mortgage loan must have been serviced by one of the participating mortgage servicers (full list on the IFR’s site here).
• The foreclosure process must have been active between January 1st, 2009 and December 31st, 2010.
• The foreclosed upon property must have been the borrower’s primary residence.

Specifically the process is meant to benefit those who received “financial injury that occurred as a result of errors, misrepresentations or other deficiencies in the servicer’s foreclosure process.” There are a number of further requirements and criteria, so if you believe you qualify it’s best to check out the website (IndependentForeclosureReview.com) or call the toll-free number (1-888-952-9105) to see if you do and white, if any, assistance is available.

The widely anticipated Standard & Poor’s/Case-Shiller index was released today, tracking home prices in 20 large US metropolitan areas, and the data are a bit of a mixed bag.

The highlight of the report, simply put, is that US home prices increased, seeing a slight 0.2% uptick in August (the Case-Shiller releases on a one-month delay). While that’s a small increase, it nevertheless represents the fifth consecutive month of increasing US home prices, and in fact 10 of the 20 cities in the index posted gains in August.

On the less optimistic side, those same US home prices remain essentially flat over the last two months when adjusted for seasonal factors.

Further, home prices remain down compared to 2010, when first-time buyer tax credits and other incentives helped the industry. August 2011 prices declined 3.8% compared to the same month last year.

All in all, the data still point to wide variations between cities, with half the measured cities seeing falling prices while the other half posted gains. The cities with the three highest index levels are, respectively, Washington DC, Los Angeles (despite a decrease in August) and New York.

Portland also continues its slow recovery, posting price increases for the sixth consecutive month, lending credence to the idea that Portland metro home prices may have bottomed out in February.

In an interesting and sure to be much-talked-about move, Congress is considering a proposed measure that would offer a visa to any foreign national making a cash investment of $500,000 in residential real estate (a single-family house, condo or townhome), according to the Wall Street Journal. The investment could go entirely to one residence, or it could be split between at least $250,000 on a primary residence and the remainder on another residential property, which could then be used as a rental.

While the measure is sure to generate plenty of criticism, the idea presumably is to accelerate the housing market’s recovery by offering incentives-to-buy to foreign nationals who aren’t likely to be in competition for domestic jobs. (At least that’s our take, hence requiring the $500,000 be a cash investment, rather than a loan.)

In fact, this measure isn’t completely without precedent, in terms of stimulating the economy by incentivizing investment for non-residents. Since the Immigration Act of 1990, the US government has offered EB-5 visas as an expedited way for immigrants to obtain green cards. To qualify, a foreign national must invest $1,000,000 in non-borrowed capital, or $500,000 in a high-unemployment or rural area, which creates or preserves 10 full-time jobs for US workers within a two-year period.

So, what’s your take? Does it make sense to ease immigration standards in exchange for investment in residential real estate, or does the latter not justify the former?

Real estate-tracking website Zillow released their list of the 10 most searched US neighborhoods for September and, be it due to curiosity, comparison to one’s own home, or genuine buyer’s interest, Portland placed three neighborhoods in the top 10, including two in the top 5.

While it’s not exactly time to declare this the beginning of the Great Portland Real Estate Boom of 2012, the list indicates there is some real interest in the higher-end neighborhoods of the city, both for home-seekers (Portland’s home prices have either bottomed out or are close to it and monthly transactions are beginning to increase) and, likely, for those who want a frame of reference in terms of pricing their own homes.

Sitting atop the list as the most searched US neighborhood (according to Zillow-defined neighborhood boundaries) in September is Portland’s Hillside (that’s the area in NW Portland between 23rd Ave and the West Hills).

Slightly down the list, as the third-most-searched, is the Southwest Hills neighborhood, which encompasses the areas behind Jeld-Wen Field, from Goose Hollow into the West Hills.

Finally, the ninth-most-searched area and last Portland neighborhood on the list is Sunnyside, which, according to Zillow, includes shallow SE areas like the Hawthorne and Belmont districts.

This is certainly a good omen for those who might be interested in putting their house on the market in the near or not-so-near future. If you’d like to know how this affects you, and if you should be doing anything with this information, feel free to drop us a line.

We’re starting this week and month off the right way: with great news! The Summa Real Estate Group is proud to announce two huge additions to the Summa team, Dave Hopkins and Patti Mitchell. Both know the industry as well as anyone, thanks to nearly 40 years of experience between the two of them.

Dave has been a fixture in area real estate for over a decade, having developed the relationships, knowledge and personality that have helped him become adept in nearly every facet of our industry.

Dave is known for his analytical, business-mind, so he’s the ideal broker to help you with the numbers, as well as figure out all the logistics of a short-sale, distressed property transaction or just the standard purchase or sale, and everything in between. In Dave, you know you’ve got one of Portland’s finest Realtors.

You can’t say enough good things about Patti, either, thanks to a tremendous skillset that comes from three things: experience, integrity and enthusiasm. Patti has done just about everything imaginable in her 25+ years in the industry, including acting as a relocation specialist and destination consultant, brokering deals with buyers and sellers, specializing in short-sales and pre-foreclosures, and acquiring FACS certification. And that’s just the beginning.

In fact, Patti has even worked on new builds from Step 1, assembling subdivision land and working in concert with developers to market not just new homes, but new neighborhoods. We’re very confident that you can’t come up with a scenario that Patti doesn’t know forward and backward.

So please join us in welcoming both Dave and Patti to the team. Both truly love real estate, and we’re sure you’ll see that when working with them.

Updating a previous story, it’s looking more and more like downtown Hillsboro is on the verge of undergoing some major changes. Last night, the Hillsboro Planning Commission unanimously approved a resolution to recommend to the city council that the streets in downtown Hillsboro be converted from one-way to two-way. The goal of the conversion is to stimulate business for the commercial storefronts in the area, revitalizing a downtown district that has grown stagnant in recent years.

The primary objections to the street-conversions are that traffic would increase, thus adding congestion, which would make the area unsafe for pedestrians and difficult for parking. To combat those issues, the approved resolution also asks the city to improve access for bicycles and pedestrians, as well as help downtown businesses establish truck-loading zones and manage deliveries.

Further, the commission is encouraging the city council to assess the logistics of constructing another parking garage in the next five years; two already reside in the downtown area. Commissioner Ross Matthews specifically voiced an opinion that the parking garage be prioritized.

The next step is for the Hillsboro City Council to rule on the street-changes and ancillary items. At the moment, no timeline has been set for a vote.