OVERALL GRADE: B
Home Prices: C
Home prices surged back much more strongly than I expected, largely due to all-cash investors and an unexpected drop in foreclosures due to the $25 billion mortgage servicing settlement signed in March 2012.
Foreclosure inventories are now at 3.3% of all homes with a mortgage, down very slightly from 3.5 percent, and delinquencies are down slightly as well, but there are still over 5 million loans that are either delinquent or in the foreclosure process. This is more than 4 times the historical average, and much of the drop has been driven by delays as banks consider new modifications under the mortgage settlement.
Rents are continuing to rise and rental vacancies are at record lows as rental demand shows no sign of easing.
Housing Starts: A
Single family housing starts improved dramatically from a year ago but are still below 600,000 on an annualized rate. Multifamily surged over 40 percent from a year ago, again driven by hot rental demand and relatively low supply.
Federal Financing: A
Government has so far done nothing to reform Fannie Mae and Freddie Mac and did not remove the FHFA acting director, Edward DeMarco, who has continued to stand in the way of principal reduction loan modifications at the GSEs.