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U.S. housing market is officially 'normal,' analysts say

The southwest Florida city of Cape Coral was one of the first housing markets in the state to crash some 10 years ago, and it fell hard when the flow of easy money abruptly stopped. The subprime loan market started melting down in the fall of 2006.

“There were people pretending they were the modern-day Donald Trump in buying a bunch of properties,” said David Kane  Jr., a Cape Coral-based originator and president of the Florida Association of Mortgage Professionals. “As soon as the market started dipping, they start bailing. It was quite a mess.”

Nowadays, Kane said the hard-hit Florida market is much changed from the dark days of 2008 through 2010, when foreclosure signs lined the neighborhoods. Most properties in Cape Coral were once deeply underwater and sold as distressed properties. Property values have since seen double-digit growth.

“In my area, the southwest area of the state, it has been back to normal for quite some time,” Kane said.  Rarely, he said, does a distressed-property sale crop up.

“There was one just across the street from me,” Kane said. “They are still out there. It is just not the norm anymore.”

Normal, not normalizing 

Most economists now agree that the national housing market is no longer merely normalizing from one of the worst downturns in modern times, but is now back to normal. 

The foreclosure rate and the number of delinquent properties on the verge of foreclosure are at eight-year lows, according to several data-tracking firms. Millions of homeowners have regained equity. Fewer struggling homeowners are seeking loan modifications and applying for help through the government’s loan-modification programs. Permanent loan modifications are now averaging under 30,000 a month, down from a peak of 160,000 in June 2010, the coalition HOPE NOW reported.

Tom Zeeb, a home-flipping specialist and founder of the Washington, D.C.-based TRACTION Real Estate Investors Association, isn’t so sure that this market can accurately be called normal, however.

“I am suspicious that there is a bunch of inventory that the banks are holding onto that has yet to hit,” Zeeb said. “They haven’t started disposing of what they have taken back through foreclosures and nonpayments. At some point, that is going to hit.”

Zeeb said he has noticed a significant drop in the number of short sales, however.

RealtyTrac Vice President Daren Blomquist said it is safe to declare the housing crisis over.

“Basically, our data has showing that we are back to prerecession levels of foreclosure activity overall,” Blomquist said. "In January, we showed 95,000 properties with foreclosure filings nationwide. It is the first time we have seen under 100,000 properties with foreclosure filings in a month since July of 2006.”

Blomquist said foreclosure filings rose slightly in February, but the numbers were still below 100,000, which is a significant milestone in the recovery.

“For two straight months we have been back to before-August-2006 levels, and August 2006 is actually an important date because that is at least when our data shows the home-price bubble popped,” Blomquist said.

In a news report this week, the Mortgage Bankers Association (MBA) also drew attention to the now-normal housing market by noting that almost no media outlets are paying attention to its quarterly releases of loan delinquency data. During the height of crisis, as many as 50 reporters would listen in on conference calls.

“As of late, however, media interest has waned to the point where MBA simply sends out a news release,” the trade group wrote. “’Normal,’ apparently, is not ‘news.’”


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