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The Foreclosure Crisis: Progress, Challenges, and Investor-Driven Recovery

Despite progress, challenges remain in the US housing market after the foreclosure crisis. Many homes are still at risk, with regional variations influencing recovery pace. Investor behavior impacts communities, requiring new solutions.

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The Foreclosure Crisis: Progress, Challenges, and Investor-Driven Recovery

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  1. The Foreclosure Crisis at Five Years Old

  2. Some Progress • Housing prices increased in almost 90% of US cities in Q2 2013 • The national foreclosure rate has fallen by 52% since its peak in 2010 • 4.5 million foreclosures have been completed since 2008

  3. Challenges Remain: • 1 million homes (2.3 % of all mortgages) are still in foreclosure, and 2.3 million (5.6%) are seriously delinquent • 2.2 trillion loss in property values for homeowners near foreclosed properties

  4. Challenges Remain: • 24% of homeowners are under-equitied or underwater; over half are underwater by 20% or more.

  5. Regional Patterns • Significant state-wide variation in the pace of recovery • Pace of recovery influenced by presence of investors, low interest rates

  6. An Investor-Driven Recovery? • Over 50% of home sales in 2012 and 2013 have been cash-only • In some cases, private investors crowd out individual homeowners and nonprofit developers http://www.realtytrac.com/content/news-and-opinion/individual-investors-feeling-squeezed-out-by-bulk-buyers-7673

  7. Challenges for Communities and Governments • NSP funds are running out: need for new sources of capital for community revitalization • Opportunities for public-private partnerships to address ongoing issues in distressed neighborhoods • Local market characteristics and policies drive investor behavior

  8. Investors and Incentives: Las Vegas vs. Detroit • Different markets lead to different investor behavior

  9. Rebuilding Communities – Ongoing Challenges • Recession-driven wealth losses undid decades worth of investment in black and Hispanic households • Tighter post-recession credit standards disproportionately impact lower-income and minority communities • Dodd-Frank regulations may impact delivery of credit to underserved communities

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