(TheNicheReport.com) -- 4/5/2012 -- A housing recovery is underway, but it may not be taking place in your neighborhood. Regional real estate markets in the United States are behaving in very distinct fashions, and analysts are not finding enough uniformity to call it a full American housing recovery.
Looking at the S&P/Case Shiller home price index, there aren’t enough signs to guarantee that prices have stopped their descent from 2006. The only positive sign in median housing prices is that they are at least not coming down as fast compared to the last few years. Still, the index is down by more than 30 percent.
There may be room for further declines in median housing prices, however, as evidenced by the number of mortgage borrowers in the United States who still face foreclosure proceedings or who are delinquent on their monthly payments. The unemployment rate has improved, but only slightly, and mortgage interest rates have increased slightly in the last two weeks.
Regional Positive Signs
The overall picture may still be grim, but residential developers, realtors, investors, and mortgage lenders are busy in some areas of the country.
The combination of record low home prices and mortgage interest rates are stirring the hopes of major home builders like Lennar, a company that recently reported strong earnings thanks to a flurry of new home orders. Such is the case in Phoenix, where builders are breaking ground in new residential housing complexes.
California is a state where home sales in February picked up the pace by 5 percent, although the bulk of those real estate transfers involved short sales and opportunistic purchases of foreclosed properties. In South Florida, the Miami high-rise condo market is active thanks to wealthy foreigners looking for investment opportunities.
Major Investors Weigh In
Banks have been building up their portfolios of foreclosed and repossessed homes over the last few years, and it seems that they are now ready to sell. According to the National Association of Realtors, investment banking firms are jumping into the real estate-owned (REO) market, with the year-long period from 2010 to 2011 recording a 65 percent increase in REO acquisitions by major investors.
There’s still the issue of the national foreclosure settlement between the major mortgage lenders, the state attorney generals, and the federal government. It is uncertain how the market will behave once the five banks involved begin to write-down principal mortgage amounts of underwater properties. Some analysts believe that this will stem the pace of foreclosures, while others think that the REO portfolios of these lenders will grow larger.
One thing is certain: 2012 will be a year in which the housing recovery will be seen on a regional, rather than national, level.