Home Prices May Withstand Foreclosure Wave

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At best, an increase in foreclosures takes a double-edged sword to the housing market. On the one hand, it means we may be inchingtoward stabilization, as shadow inventory begins to move through the pipeline. On the other, it spells more stress for beleaguered homeowners and puts downward pressure on home prices.

Housing economists predict that the next wave of foreclosures is about to hit, following the recent settlement between government and lenders in the "robo-signing" scandal. No doubt it will still cause pain to hard-pressed borrowers. But in a break from the past, it may avoid depressing home prices. "There are countervailing strengths," said Mark Fleming, chief economist at CoreLogic, an analytics firm. "We could very well see increasing prices in some markets this year, even though they have significant shadow inventories." The "shadow inventory" is the overhang of homes expected to move through foreclosure that are not yet listed on the market.

A report from CoreLogic released today said that completed foreclosures edged down from 71,000 in January to 65,000 in February, and that the number of homes in a state of foreclosure has shrunk by 115,000 homes from February 2011 to 1.4 million homes in February 2012.

Despite the slight month-over-month drop, foreclosure activity has remained relatively steady recently, but economists predict that it will rise in the coming months because of the resolution of an investigation into illegal foreclosures between the government and major mortgage servicers.

Fleming told AOL Real Estate that the housing market may feel the impact of the robo-signing settlement during the summer, after the five banks involved in the settlement implement government-approved foreclosure practices.

"All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year," Daren Blomquist, vice president of online foreclosure marketplace RealtyTrac, said in February. The economist predicts that completed foreclosures will jump by 25 percent in 2012, totaling 1 million.

But since the market must eventually absorb the excess supply of foreclosed homes, breaking the foreclosure logjam isn't necessarily a bad thing. "I would like to see the pace increase, because that means we'll be able to work off the inventory faster," Fleming said. And the downward pressure on prices that's caused by an increase in foreclosures may be mitigated by improvements observed lately in other sectors of the market, as well as the economy as a whole, he says.

Home sales have risen by 13 percent in the previous six months, according to Capital Economics, while the delinquency rate saw a year-over-year 14 percent drop as of February, according to Lender Processing Services. Homebuilder optimism is measured at a five-year high, and real estate agents' optimism reportedly more than doubled in the first quarter of 2012, against the backdrop of positive market indicators.

If the positive trends continue, Fleming said, the market could begin to stabilize as early as this year.

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Home Prices May Withstand Foreclosure Wave

Recent reports on the housing market suggest that real estate prices may finally be close to hitting bottom, with at least one expert predicting that national median prices will tick up this year for the first time since the housing bust. 

For some towns, price recoveries have been in the works for some time. Florida, in particular, lays claim to quite a few markets that appear to be firing on all cylinders, and posting the price gains to show for it.

With the help of our friends at Realtor.com, AOL Real Estate brings you homes from the metro areas that posted the greatest year-over-year median price increases in February, as measured by Realtor.com listings. If a national price recovery is happening, these are some of the towns leading the charge. 

Location: Sarasota-Bradenton, Fla.
Median Price Increase: 14.47 percent

Home Price: $5.479 million
Beds/Baths: 5/7
Sq. Ft.: 5,286

This home, apparently recognized as a local architectural achievement, uses the material terrazzo, a combination of granite or marble and concrete, for its indoor and outdoor flooring. 

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Highlights of the home include its gourmet kitchen, master bedroom, master bath, entertainment areas, office and exercise space. Need we mention the views? 

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Location: Daytona Beach, Fla. 
Median Price Increase: 15.56 percent

Home Price: $7.7 million
Beds/Baths: 4/10
Sq. Ft.: 13,654

Commanding a long, lavishly-landscaped driveway, this "new traditional" epitomizes the "good life" in Daytona Beach. 

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The gated home has its own dock and and a generous stretch of waterfront.

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Location: Fort Myers-Cape Coral, Fla. 
Median Price Increase: 15.59 percent

Home Price: $8.7 million
Beds/Baths: 6/13
Sq. Ft.: 13,723

This home is a behemoth. But while it may stretch 13,723 square feet, you're never far from a bathroom. There are 13. 

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The home is steeped in luxury inside and out. Exhibit A: a nine-car garage. 

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Location: Naples, Fla. 
Median Price Increase: 15.67 percent

Home Price: $11.95 million
Beds/Baths: 5/8
Sq. Ft.: 7,890

She's not hard to look at, is she? One of the many things this mouth-watering residence has going for it is its gigantic, resort-style pool. The home also has 127 feet of waterfront, and its many columns, inside and out, give the place regal flair. 

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As far as amenities, we say the theater room and library top the list. 

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Location: Boise City, Idaho
Median Price Increase: 16.28 percent

Home Price: $1.25 million
Beds/Baths: 4/6
Sq. Ft.: 6,984

Sitting on a hilltop perch, this sprawling log-built home commands five acres of woodsy Boise real estate. 

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The place is brimming with interior detail, including cherry floors, built-in cabinets and sound system, "forged-nickel hardware" and crystal chandeliers. 

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Location: Washington, D.C.
Median Price Increase: 18.45 percent 

Home Price: $7.495 million
Beds/Baths: 6/8
Sq. Ft.: 9,710

Throw down for this stately manse and you'll win the right to call Joe Biden neighbor. Vicey himself lives in the neighborhood. The Tudor-style home has 17-inch stone walls that are stitched with timber and brick. 

See the listing for more details, or see AOL Real Estate's full profile on the home

The home's interior has ebony-stained floors, and amenities include a library, breakfast room, great room, "executive kitchen," gymnasium and au pair room. 

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Location: West Palm Beach-Boca Raton, Fla. 
Median Price Increase: 18.48 percent

Home Price: $3.4 million
Beds/Baths: 6/7
Sq. Ft.: 7,043

This lavish mansion boasts membership in Harbour Isles, a ritzy, secluded community. In fact, ever single home has a dock, according to the listing. The 7,000-square-foot home has over 90 feet of waterfront for itself. 

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Pictured here is the home's columned patio that offers soul-soothing river views. 

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Location: Punta Gorda, Fla. 
Median Price Increase: 19.35 percent

Home Price: $1.15 million
Beds/Baths: 3/2
Sq. Ft.: 3,950

Overlooking a stretch of creek, this luxury property spans four verdant acres. Of all the interior highlights, the great room really caught our eye, thanks to some creative copy on the part of the property's listing description. Inside the cavernous room, the "Built in Wood/Gas Fireplace is perfect for snuggling on [the] occasional cool Florida evening," the description says.  

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The home has a gourmet kitchen with cherry cabinets, marble countertops, dual ovens and its very own "butcher block." There's also a glass-enclosed pool that overlooks the property's creek. 

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Location: Phoenix-Mesa, Ariz. 
Median Price Increase: 20.62 percent

Home Price: $4 million
Beds/Baths: 6/8
Sq. Ft.: 9,309

Located in the city that posted the second-highest year-over-year increase in home prices for February, according to Realtor.com, this $4 million mansion features marble and oak floors, beveled glass windows and custom cabinetry. Oh, and also close to 10,000 square feet of space. 

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The home has a guest house and expansive courtyard connected to the gourmet kitchen. Amenities run the gamut: The home has a game room, wine cellar, music room and potting room, among other perks.  

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Location: Miami
Median Price Increase: 26.19 percent

Home Price: $7.7 million
Beds/Baths: 6/7
Sq. Ft.: 6,500

This sprawling apartment nestles into one of Miami's soaring residential skyscrapers. Price per square foot for the contemporary is a whopping $1,185. 

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The sleek, lavish interior opens up to a balcony perched over Miami's waterfront. Occupants can suck in the jaw-dropping views while lounging in an outdoor hottub. 

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A recent report provided one of the most hopeful signs of recovery for the housing market yet. John Burns Real Estate Consulting found that home prices actually have risen marginally since January. The company says that its gauge of the market, the Burns Home Value Index, eliminates a three-month lag time that distorts other indices by recording contract signings of home purchases, not closings.

Its finding conflicts with most other indices, though, such as the Standard & Poor's/Case-Shiller home-price index, which showed a drop in home prices in January.

Follow Teke Wiggin on Twitter (@tkwiggin), follow @AOLRealEstate, or connect with AOL Real Estate on Facebook.

See also:
HARP 2.0: Do You Now Qualify for Mortgage Relief?
Netizens Deride Foreclosure Settlement



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