By Tim McLaughlin, Sr. Vice President, Weichert Financial
The CoreLogic Home Price Index (HPI) showed that home prices nationwide, including distressed sales, increased on a year over year basis by 9.7% in January 2013 compared to January 2012. This change represents the biggest increase since April 2006 and the 11th consecutive monthly increase in home prices nationally. On a month over month basis, including distressed sales, home prices increased by 0.7% in January 2013 compared to December 2012. The HPI analysis shows that all but two states, Delaware and Illinois, are experiencing year over year price gains.
Excluding distressed sales, home prices increased on a year over year basis by 9.0% in January 2013 compared to January 2012. On a month over month basis, excluding distressed sales, home prices increased 1.8% in January 2013 compared to December 2012. Distressed sales include short sales and real estate owned (REO) transactions.
The number of American homes that end up in foreclosure has started to decline, a welcome development that partly reflects an improving housing market.
But a look at data that tracks distressed home sales reveals another reason why foreclosures are becoming less prevalent: More homeowners are turning to short sales where they sell their homes for less than what they owe in mortgage debt and the bank typically eats the difference.
In the past, short sales were rare. Now they are becoming increasingly common in part because lenders, homeowners and real estate agents have become more experienced at marketing and pricing the properties, and because short sales are considered a more efficient way than foreclosure to sell underwater properties.
The shift is helping the housing market pare the backlog of distressed mortgages while cutting the amount of time vacant homes sit empty. That has helped keep home prices firm in the improving real estate environment.
Pending home sales rose in January and have been above year-ago levels for the past 21 months, according to the National Association of Realtors