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Looking Back: Top 10 Real Estate Stories of 2009

The last week of December is always an interesting time. As we plan for the next year, we like to look back on all the important stories and events of the last year. We will gather around the television or paper and endlessly quiz each other on the multitude of Top 10 Lists that inevitably appear.

Here are what we see as the significant happenings in real estate during 2009.

1. Interest Rates remained at historic lows.

The federal government continued their strategy of buying mortgage-backed-securities thus insuring that mortgage rates would continue to hover around the 5% mark.

Shaded Interest Rates

2. Home Sales started to surge.

As the year moved along, more and more buyers could not resist taking advantage of low interest rates and the first time home buyer tax credit. Sales across the country increased rather dramatically. The final 2009 Existing-Home Sales Report from the National Association of Realtors showed that sales were up 44.1% over last year’s numbers.

3. Prices continued to tumble.

Though we saw an increase in sales as the year went on, because of high inventory levels, prices in every price range continued to soften. The last issue of the Case Shiller Report in 2009 showed that prices were still down 7.3% from a year ago.

4. The number of homes with negative equity reached almost 25%.

As prices continued to drop, more and more homeowners found that their home was worth less than the value of the mortgage they had on the home.

5. Mortgage modifications could not keep pace with number of families needing help.

Over 3,100,000 people requested help. At last count, thirty one thousand had received a permanent modification.

6. The number of foreclosures skyrocketed.

As more people were denied a modification, the foreclosure numbers began to mount. The December ’09 press release from Realty Trac reported an 18% increase in foreclosures compared to the year before.

7. The 90+ day delinquency rate increased sharply.

Historically, the number of mortgages that fall 90 or more days behind in payments has been less than 1%. At the end of 2008 that percentage doubled to 2%. At the end of 2009, the 90+ day delinquency rate sits at 5%. Let’s show this with the following graph from Calculated Risk:


8. The number of people who were capable of catching back up on late mortgage payments (cure rate) dropped dramatically.

The ‘cure rate’ on delinquent loans fell to less than 1% in 2009. In 2005, over 40% of those falling 90+ days behind were able to make up the arrears.

9. ‘Strategic defaults’ became acceptable.

With more and more families losing value in their homes, many decided that, even though they could pay the mortgage, they wouldn’t. The stigma of being seen as a person who wouldn’t pay their debts all but disappeared. Nearly 25% of all foreclosures are now strategic.

Strategic Defaults

10. The KCM Crew decided to start a blog.

(Sorry… we couldn’t resist.)  The KCM Crew had a goal to simply and effectively explain all relevant information from today’s real estate market. We hope that we’ve accomplished our goal, and that you’ve found this information helpful!

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