Mortgage Delinquencies Down but Not Over

Mortgage delinquencies may be declining but that doesn’t mean they are over by any means…

Credit bureau Transunion reports that mortgage delinquencies dipped 14% in 2012. Of course it’s no secret that banks and mortgage lenders have been tightening up underwriting and credit standards for years too, which ought to lead to fewer foreclosures ahead.

However, those worrying that they have missed the boat and opportunity of buying a home at a discount or flipping foreclosures shouldn’t throw in the towel just yet.

Although down, mortgage delinquencies are still over 3 times what they should be in a normal environment. Then there are still 11 million underwater U.S. homeowners out there according to CoreLogic and banks like Citi have interestingly still been resistant to release reserves to cover new delinquencies, suggesting they expect more on their way. Plus, we can’t forget there are some 8 plus years of foreclosures back logged in states like NY.

Even hot markets around the country like San Diego, CA where home buyers could be up against 10 to 20 other competing offers home values are still below previous highs and have plenty of room to go up.

Those looking for the best places for buying a home for growth should look at the price of the same homes over time, local job markets, affordability, strength of local government finances and economic fundamentals that predict extended future equity appreciation.

Some sizzling real estate markets have already been returning 20-30% annual house price gains and some still debate whether we are out of the crisis yet. Even if things slow a steady 5% rate of appreciation over the next 10 years is still quite a significant sum for the average home buyer. Even those grumbling about bidding wars, are really locking in pretty attractive equity positions when you look at the big picture.