Two short- to medium-term factors have initiated the housing recovery, but they may not last through 2013, according to a new analysis by CoreLogic’s chief economist. Negative equity has reduced inventories by locking homeowners in place and preventing them from selling and real estate investors have dramatically increased demand, especially for lower tier properties, which today have reached levels similar to the peak of the housing bubble, wrote CoreLogic’s Mark Fleming in the MarketPulse newsletter released today. Fleming said that CoreLogic research found that in markets with less than a 10 percent negative equity share of mortgaged homes, the average months’ supply of inventory was about eight months. In markets with more than a 50 percent negative equity share, the average months’ supply was half as much, about four months. However, the “lock out” effect of negative equity will moderate as prices rises and supply will return to the market. “What we don’t know is whether it will take months or years,” Fleming wrote. Investors’ marker share of purchases rose from 4 percent early in the decade to rebound after the cfrash, especially in the lower priced tiers of the market. “The housing market is clearly recovering on the strength of investor-based demand for assets to rent and the lock-out effect of negative equity and being under equitied. These are short-to medium-term benefits driving recovery that will likely persist into 2013. Beyond that, an even healthier economy and fundamental gains in economic growth and consumption with rising house prices will drive the housing market to a full recovery,” he concluded.
