San Bernardino housing market improves without eminent domain
The San Bernardino County, Calif. housing market showed signs of improvement in August even without a controversial eminent domain plan, according to Clear Capital.
Prices on homes not in distress increased 4.2 percentage points higher than the growth in REO values over the previous three months, analysts said. The recovery is even beginning to mirror the rebound in Marciopa County, Ariz., which is considered one of the hottest markets in the country.
"Seeing those parallels (with Maricopa) in terms of value loss from the peak and those parallels in REO saturation, in our opinion offer evidence that the San Bernardino recovery is on a strong, organic path," said Alex Villacorta, chief analyst at Clear Capital. "Without any eminent domain policy, prices are growing."
In both areas, home values fell more than 60% from their peaks.
But over the last three years, prices in San Bernardino gained 14.6%, just behind a 19.2% increase in Maricopa. However, over the last year, the two seemed to diverge. Prices grew in Maricopa by 25% over the last 12 months compared to just a 4.7% gain in San Bernardino.
But REO sales, as a percentage of the San Bernardino market, was cut in half over the past three months, a key indicator of where prices may go.
County officials, however, are considering a way to speed things up. A proposal would use eminent domain to buy underwater mortgages for private investors, have the loans written down and refinanced into a government-backed mortgage. Bond investors and even local residents howled at the idea, claiming it forces unnecessary losses and pushes unfair profits to private companies led by Mortgage Resolutions Partners.
At a recent county hearing, several speakers criticized the board for even considering the idea without enough data. Villacorta said it inspired to actually take a look at how the market is behaving.