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Particular data showing that home prices rose slightly in the month of September and if you look at the whole third quarter.
Prices up better than three and a half percent over the third quarter of 2011 -- some say.
Are right now this is -- side this time really it's a sign that we're on the rebound.
But how can the market really recover well we've got so many homeowners that are still under water.
We've got millions of homes in some stage of foreclosure and that jobless rate improves slightly but it still historically very very high.
Joining me now executive vice president of Carrington mortgage holdings Rick -- -- Rick we got a lot of headwinds still but these numbers are start and to get people all excited again is this as we call on Wall Street a dead cat bounce this -- Recovery.
-- did not tell I think it's actually sustainable recovery and all the indices there are going in the right direction whether it's.
Pending home sales existing home sales new home sales housing starts foreclosures going down.
The prices going up -- it it it looks like we we actually have finally turned the corner in the housing market.
All right but we still have let's start with with the house is underwater we do know I don't know what the numbers are you tell me but -- -- -- horrendous number of people that.
Even if they wanted to sell they can't sell when so.
There's very few homes for sale CU homes for sale and demand picking up you're gonna get higher prices just out of economics one -- one.
Yeah you're right you say it's supply and demand to all three pools of potential inventory -- low.
We have fewer distressed homes available we -- -- -- new homes available and because of what you talked about what -- is being upside down we if you were existing homes available.
Even if demand stays constant you wind up running out of inventory pretty quickly so that is pushing home prices up.
As home prices continue to go up some of those under water bar -- suddenly be at least neutral.
In some cases right side up.
And be able -- marketing their primaries -- well what let's keep this in perspective this is a recovery it's not an explosive boom.
Even with the price increases the case Schiller announced recently were were back to 2003 pricing levels.
And rolling gonna fight wind up selling about four and a half million properties this year the peak was about seven point two million so that was the notice after you kept in perspective.
But you know you know what happens all of a sudden you start to see the prices won't be legal hand.
It's the same problem we read into before I got to get in on this -- why in the price is gonna go up and pretty soon you get that snowball bubble going again.
I you know what I think because of the headwinds you're not gonna have that the risk of that happening at least not as much of -- risk who saw back in you know three -- -- six.
You have what you talked about in terms of of underwater borrowers probably somewhere between 25 and 30% of all borrowers are still at least -- -- upside down.
And any other real headwind is it's very very difficult for people to get do get along these days to buy a house.
To get -- to get an FHA loan right now in your fight -- 700 so.
Did that that by itself -- the lenders are not taking on much risk and ended it unless that changes but it's going to be hard to see those prices skyrocketing.
Well that's another whole story about FHA.
I'm at which we don't do we include the FHA numbers in all of these statistics that are rolling off of the over the newswires.
Again there they're looking like.
They're doing what what I think was put god is in trouble in the first place is making loans for almost nothing down.
So that the bar or -- has no skin in the game walk away.
Well you know historically FHA default rates and delinquency rates have been a little little higher than your your conventional loans with higher down payments.
-- FHA became the lender of choice when the sub prime market went -- back -- you know six.
So if you look at FHA loan performance in 06070.
Wait maybe you know nine.
It was pretty dismal.
What's not being reported as a 2012.
Went when the numbers are finally -- and will probably wind up being.
-- one of the most profitable profitable years FHA has ever had so yes there were some some problems early on I think they've corrected most of them.
And and I think what you're gonna see is FHA come out of it stronger but but you we have a -- bad loans to go if you're absolutely right.
And that backlog will still make news -- and the default numbers will still be there and then will that be wet blanket on.
Another part of the wet blanket of trying to get a -- -- market going.
-- Tom that's exactly right that that overhang of distressed properties look there's.
About half a million bank owned properties that are on the market yet but we'll eventually get there there -- A million have homes in foreclosures other three million properties.
That are seriously delinquent at least ninety days past due and usually a lot more.
Though that the real estate market is consuming about a million to one point 25 million of those a year.
So we have about a three year inventory of those properties to work her way through.
Before that weight is off the market and -- can really start to recover in in in in -- in a very meaningful way.
All right -- charge -- thanks for the update always good to see it thank you.
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