A handful of housing data this week supports the case that the U.S. housing market may be heading for a recovery.
Housing starts rose more than expected in April, up 2.6% to 717,000 due primarily to a rise in single and multi-family starts,
People falling behind on their mortgages fell to 2008 lows during the first quarter, according to The Mortgage Bankers Association. Loans as least 30 days over due still make up 11.8% of all mortgages, but that number has fallen from 12.8% in 2011 and 14.7% in 2010.
Foreclosures hit a five-year low in April to 188,780, down 5% from March and 14% from a year ago, according to RealtyTrac's latest U.S. Foreclosure Market Report.
Daren Blomquist, vice president at RealtyTrac, an online market place for foreclosure properties, joined The Daily Ticker's Aaron Task to discuss the latest data and whether the housing market has bottomed.
"The case is starting to build that the market is finally starting to form a bottom and we are starting, at least in some areas, to go back up and we are seeing that in the foreclosure numbers as well," says Blomquist.
The positive news is a bit surprising for RealtyTrac, which had been predicting that a new wave of foreclosures would eventually hit the market due to a backlog in the pipeline. That tide may now be turning for two reasons, says Blomquist.
First, in many states across the country, foreclosures are being processed much more efficiently because they do not have to pass through the court system - what the industry calls a non-judicial foreclosure state. The combined activity of the 24 non-judicial foreclosure states fell 7% from March to April and was down 29% from 2011. Fewer foreclosures in California, Nevada and Arizona were behind the decrease last month.
And second, banks are now opting to convert distressed properties into short sales rather than foreclosures, which means banks are wiling to accept less from a borrower than is due on a property. In a short sale, the borrower still loses their home, but the process is much less involved for all parties in the deal.
Short sales are up 33 percent year-over-year nationwide, says Blombquist, in part because government programs are starting to take hold. In places like California, short sales are up 52 percent and in Michigan they are up 100 percent.
There is also a loan forgiveness law that expires at the end of this year, which is pushing up the number of short sales and decreasing the number of foreclosures.
"It is a good year for homeowners to do a short sale" because their mortgage debt is being forgiven "and at least at the federal level it is not taxable," says Blomquist.
A new poll by Public Policy shows voters in key swing states disapprove of Obama's handling of the housing market. Blomquist give the administration some "credit" for the uptick in housing and implementation of short sales.
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