DENVER -- Foreclosures are up in Yourtown, but a colleague at a credit union in a neighboring city is seeing foreclosures drop.
Your mortgage department is witnessing an upswing in activity and local Realtors say sales will improve even more later this year. However, you're reading headlines such as "Delinquencies and Foreclosures Increase in Latest MBA National Delinquency Survey" and "Housing Pain Spreads."
What's going on?
The folks at Integrated Asset Services, which handles default management and residential collateral valuation, said the answer may be that--as agents have preached for decades--real estate is local, and you need to look at what's happening not just in your state or city but on Elm Street and in the Happy Acres subdivision.
Integrated Asset has been using a monthly index internally aimed at tracking the median sale prices of detached single-family residences in more than 15,000 neighborhoods across the United States. The company has now rolled the IAS360 House Price Index out to a wider audience.
David McCarthy, Integrated Asset president/CEO, noted the data is collected from several sources, primarily county property tax assessors. The results confirm it's still currently a very volatile market, but McCarthy emphasized how important local data is. If you're basing your decision on a specific mortgage loan on figures covering an entire standard metropolitan statistical area, you may reach a faulty conclusion.
"Other indexes report at the SMSA level, for example the Denver/Aurora SMSA which encompasses 10 counties. It would show a pretty steep decline in prices. Drill down and you'll see some segments, or neighborhoods, are performing very well. The sky is not falling everywhere," McCarthy said.
The data released in June by Integrated Asset, which covers through the end of April, show some of the most depressed areas in the country improving, while others who had seemed sheltered are just beginning to feel the impact of the real estate slump.
On the national level, April year-over-year sales declined 9.72%. At the same time, the Northeast and the South regions moved to the black, while the Midwest rebounded with a 5.90 gain in median sales price. The Western region witnessed a 5% drop in home sales, after a 5% increase in March.
But looking at the West, for example, more closely, Arapahoe County, Colo., posted a 1.38% price increase. Riverside County, Calif., and Maricopa County, Ariz., began to show signs of leveling off from double-digit declines.
Across the country, an article in The Tampa Tribune also underscored the significance of highly local data. The article reported that the average sales price of existing homes in Hillsborough County dropped 9% in the first quarter of 2008. However, prices in the Sun City Center-Wimauma area slid only 4.5%, while the decline in Lithia-FishHawk was 14% and 13.8% in Riverview.
One bright spot, at least looking ahead, involved new homes. Late last summer Tampa-area builders were constructing fewer houses than they were selling. That indicates a shrinking of the troublesome new home inventory.
Florida Realtors are also bullish about the impact of a change in the state's property tax law. Voters recently approved an amendment allowing homeowners to keep their Save Our Homes property tax limits when they move from one house to another. The financial hit from likely much higher taxes had evidently stopped many existing homeowners from moving.
What's sparking upturns in other areas?
"Certainly the government has various initiatives," McCarthy answered. "Anything that prompts optimism helps. It's very difficult to say if there's a trend upward or not. We may see this whole thing go down again. The data is very volatile."
Even so, CUNA's 2008/2009 Credit Union Environmental Scan indicated although the mortgage market continues to show signs of weakness, credit union mortgage lending has increased thanks to members' refinancing burdensome mortgages from other lenders. CUNA also suggested credit unions should focus on mortgages and loan products more insulated from economic downturns.