In the 10 states where prices are still furthest from their pre-crisis peaks, homes in the bottom 20% value tier are lagging - sometimes considerably - in recovery as compared to the highest valued properties, according to Black Knight’s November Mortgage Monitor.

In California, for example, properties in the top 20% price tier are now just over 3% behind their pre-crisis peaks; the lowest 20% are still 32% off those peaks.
In many cases, these disparities boil down to the fact that during the bubble, lower-tier properties appreciated at much higher rates than higher-valued properties, then fell harder and further when the bubble broke.

According to Trey Barnes, Black Knight’s senior vice president of Loan Data Products, home price recovery for the lowest 20% of property values has lagged behind those at the top in America’s hardest hit states.

“We looked at HPI appreciation from pre-crisis peaks to today in the 10 states currently trailing the furthest behind their pre-crisis housing maximums,” said Barnes. “The data showed a clear difference in the levels of recovery among home price tiers. The Black Knight HPI separates home values for every geographical division into five equal tiers; those in the lowest 20% of home values have been lagging behind their higher-valued counterparts in recovery to pre-crisis peaks, sometimes considerably.

“For example, in Nevada – overall, still more than 39% off its pre-crisis peak – properties in the lowest tier are nearly 47% off their peaks, as compared to 36% for those in the highest tier. In California, an even starker contrast emerges: properties in the highest tier have now come within just over 3% of their pre-crisis peak, while those in the lowest 20% are still almost 32% down. In many cases, these disparities between price tiers can be attributed to the fact that during the bubble, lower-tier properties appreciated at much higher rates than higher-valued properties and likewise fell harder and further when the bubble broke.” 

Black Knight also looked into the current state of play with regard to loan modifications and found overall activity was down in 2014.

HAMP mods accounted for over half of all modifications performed last year, with the majority of HAMP activity shifting overwhelmingly to FHA/VA mortgages (close to 70% of 2014 HAMP mods, as compared to just 13% of the same in 2013).

HAMP mods re-default at much lower rates than proprietary mods, but 2014 HAMP mods are re-defaulting at higher rate than either of the prior two years.

Finally, Black Knight performed a deeper analysis on this month’s 11.8% spike in the national delinquency rate.

While seasonality suggests that such increases can be expected each November, this was the largest such jump in six years; in fact, it was the largest month-over-month increase for any month since November 2008. However, the size of the increase can be largely attributed to a reduced number of payment processing days for the month (given two federal holidays and the month ending on a Sunday).