Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
In this series, real estate and mortgage expert Steve Cook takes a look at falling home values: the causes, the effects, why home prices are still falling and what needs to happen to see home values improve.
Yesterday, I looked at housing market predictions and asked why people aren’t buying houses despite prices and rates hitting record lows. Most of the blame rests with the economy, which has not produced the jobs necessary to kick start home sales.
As job numbers worsened during the spring and summer, mortgage default rates did flip flops, and demand softened. Housing will not improve until the employment picture improves, but housing has some special problems that could continue to keep it in the economic doghouse.
First on the list is last year’s $27 billion homebuyer tax credit. It not only failed to create any lasting stimulus to home sales but also probably made things worse. It encouraged buyers to buy homes earlier than they planned a year ago last spring so that they could take advantage of the credit. As a result, it created an artificial vacuum in demand in the second half of last year that contributed to the second dip—an all-time low—in home prices last March. A year later, we are still feeling the effects in diminished demand.
Second is the problem of financing. Ever since Fannie and Freddie imploded in September 2008, our system of home finance has been broken, and no one has yet figured out how to fix it. Whatever the future brings, it will involve structural changes in the way mortgages are financed how risk is assessed, and what it will cost borrowers.
You can’t blame lenders for not making investments in the mortgage business or creating new products and services to improve the borrowing experience when they know the rules are going to change. Three years have passed, and in Washington there’s no sense of urgency to resolve this problem.
Third is the aforementioned problem of foreclosures. Some 23 percent of all homeowners with a mortgage are still underwater and at high risk of default. One good body blow to the economy like those we suffered in 2007 could change the foreclosure picture overnight.
In any case, even with the improving default picture, some 5.4 million homes are in default over 90 days, in the shadow inventory, or in the visible foreclosure inventory being processed or marketed. That’s about 400,000 more homes than Americans will buy this year.
However, there’s reason to hope for a better 2012. Through August, seasonally adjusted sales are running 18.7 percent ahead of last year, although other sources report September sales are down and the year may well end with prices nearly even with 2010. That may not sound very exciting, but it means we’ve recovered from the tax credit nightmare.
By the end of this year, we will have turned 1.6 million abandoned foreclosures into homes for people, which is an investment in the future. About five million homes will change hands in 2011, and not one of them will have been stimulated by a federal tax credit. A dozen or more markets will experience annual price gains, and more will see local prices improve in 2012 as they get inventories under control.
This has been a year of purification, a necessary step in the process of returning housing markets to a balance that is unsullied by artificially depressing foreclosures or artificially stimulating tax credits. The situation is fragile, but if the economy gets no worse, next year will be better. If we let the housing markets continue to do their job, the day will soon come when demand will restore the property values that have disappeared temporarily from the balance sheets but not from the hearts of homeowners.
Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.
Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.