Are home prices on the uptick? Not for long, according to Standard & Poor’s. Short sales and home loan modifications have just delayed inevitable foreclosures, the rating agency said in a report yesterday. Once borrowers “default again, the (bank) is going to realize there is no other path to go down,” said Mike Dougherty, a New York-based S&P analyst. That should be enough to stunt the recent inroads sellers have seen since last summer, when the S&P/Case-Shiller Home Price Index rose for the first time since 2007. The index measures home prices in metropolitan areas across the country. Since May, the index rose by more than 3 percent. That suggests a correction to residential home prices is nearing an end, according to the report.
But the agency said there is an unseen market of unsold homes — real estate often referred to as shadow inventory composed of lenders and other sellers that have long been sitting on the sidelines.
Standard & Poor’s said that “overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.”
That correction might have already begun in the New York metropolitan area, according to the National Association of Realtors.
Last year, in North Jersey and the New York City area, the median price of existing single-family homes dropped 5.5 percent, to $434,000, in the fourth quarter from the same period in 2008.
And foreclosure filings here are already at a record high.
Last year, 62,775 foreclosure notices were filed, up from 48,698 in the previous year — and a far cry from the
roughly 23,000 notices filed in 2006, according to the state judiciary.
Nancy Reeis, an S&P analyst, said sellers should be cautious about reacting to any rise in housing prices because they could be illusory.
“Like we said, the current housing prices might be the result of a temporary shift,” she said. Star Ledger